Nano Nuclear Energy Inc. (NNE:NASDAQ) raised US$18 million in an upsized equity offering, with which the company may accelerate its strategic initiatives, reported The Benchmark Co. analyst Michael Legg in a July 15 research note.
"We believe the additional cash on the balance sheet will enable Nano Nuclear to accelerate growth initiatives, including Nuclear Regulatory Commission (NRC) applications, consulting services, and related mergers and acquisitions, physical demo reactor development, and establishment of a company campus for research and development and related projects," Legg wrote.
The company is developing portable clean energy solutions, including nuclear microreactors, and the related supply chain.
56% Gain Possible
Given the news, Benchmark reiterated its US$39 per share price target on the New York-based company, which was trading at the time of the report at about about US$25 per share, noted Legg. The difference between these prices implies a potential return for investors of 56%.
Nano Nuclear remains a Buy.
"We believe the stock will benefit from increased knowledge and proliferation of demand for small modular reactors 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," Legg commented.
Details of Cash Raise
In this upsized financing, Nano Nuclear any sold 900,000 shares of common stock along with warrants to purchase 450,000 shares of common stock, at a cost of US$20 per unit, Legg relayed.
Each unit is comprised of one common stock share plus one warrant to purchase up to one-half of a common stock share.
"Our share count [for NNE] increases to 55 million (55M) shares from 29M today, factoring in equity raises over the next five years," wrote Legg.
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Disclosures for Benchmark, Nano Nuclear Energy Inc., July 15, 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.
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. Price Charts Benchmark’s disclosure price charts are updated within the first fifteen days of each new calendar quarter per FINRA regulations. Price charts for companies initiated upon in the current quarter, and rating and target price changes occurring in the current quarter, will not be displayed until the following quarter. Additional information on recommended securities is available on request.
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