Because the stock of Nano Nuclear Energy Inc. (NNE:NASDAQ) rose about 400% since going public at US$4 per share last month, spurred by two developments, The Benchmark Co. increased its price target on the company to US$39 per share from US$15, reported analyst Michael Legg in a June 25 research note.
"Our new net asset value calculation benefits from the stock's recent appreciation with the increased share price offsetting previous dilution in our model," Legg wrote.
The new target, the analyst explained, is derived from Benchmark's net present value analysis of Nano Nuclear out to 2042, with a 25% discount applied.
"Our share count increases to 38 million (38M) shares from 29M today, factoring in equity raises over the next five years," the analyst wrote. "Should the company receive government grants, our share count assumptions could prove conservative."
89% potential return
In comparison to the US$39 per share price target, the U.S.-based nuclear energy company is trading at about US$20.87, noted Legg. From this price, the return to target, or potential gain for investors, is 89%.
Catalysts for the stock, he pointed out, are further operational success and increased knowledge and demand for small modular nuclear reactors.
Nano Nuclear remains Buy-rated.
Recent positive events
The energy company is developing two clean energy, portable microreactors named ODIN and ZEUS and building out a related supply chain.
Earlier this week, Legg reported, Nano Nuclear announced it acquired the intellectual property for the annular linear induction pump (ALIP) technology, used in small nuclear reactor cooling and heat transfer. The developer will apply the ALIP technology, which employs electromagnetic pumps versus physical pumps, to ODIN to further optimize this microreactor.
Also positive for the company and its stock was the passage last week of the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act by the U.S. Senate. The law aims to facilitate the domestic development of advanced nuclear reactors.
"We believe this passing is further justification that nuclear is needed to reach climate initiatives, as nuclear is the only large-scale, reliable, emission-free energy source," Legg commented.
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- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Benchmark, Nano Nuclear Energy Inc., Jue 25, 2024
Analyst Certification The Benchmark Company, LLC (“Benchmark”) analyst(s) whose name(s) appears on the front page of this research report certifies that the recommendations and opinions expressed herein accurately reflect the research analyst's personal views about any and all of the subject securities or issues discussed herein. Furthermore, no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst(s) in this research report.
Benchmark Disclosures as of June 25, 2024
1. In the past 12 months, Benchmark and its affiliates have received compensation for investment banking services from the subject company. 2. In the past 12 months, Benchmark and its affiliates have managed or co-managed a public offering of securities for the subject company. 3. Benchmark and its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company in the next three months.
Investment Risk Risks include the inability to source capital and fund NNE's buildout, the need to secure government permits related to nuclear power, loss of key management, unproven technologies at scale, larger well financed competition, and unforeseen regulations.
Valuation Methodology Our target price of $39 is based on our NPV analysis built out to 2042 utilizing a 25% discount rate. Our share count increases to 55mm shares from 29mm today, factoring in equity raises over the next 5 years. Should the company receive government grants, our share count assumptions could prove conservative. We believe the stock will benefit from increased knowledge and proliferation of demand for SMRs as safety and use cases gain public acceptance as climate change initiatives favor emission free energy and see such as key catalysts for the stock alongside continued operational progress.
General Disclosures The Benchmark Company, LLC. (“Benchmark” or “the Firm”) compensates research analysts, like other Firm employees, based on the Firm’s overall revenue and profitability, which includes revenues from the Firm’s institutional sales, trading, and investment banking departments. No portion of the analyst’s compensation is based on a specific banking transaction. Analyst compensation is based upon a variety of factors, including the quality of analysis, performance of recommendations and overall service to the Firm’s institutional clients.
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