Oklo (NYSE:OKLO) The stock fell 13% as of 3:40 p.m. ET on Wednesday following the investment bank’s news. Goldman Sachs cut its price target on nuclear power stocks by 14% to $91 per share and maintained only a neutral rating on the stock.
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This is a bit strange. After all, Oklo currently trades at nearly $68 a share, and a rise to $91 would mean a 34% profit margin over the next 12 months. You might think that the potential for profits like this would put Goldman Sachs firmly in the “buy” camp for Oklo.
But that’s not the case. Instead, Goldman Sachs is hedging its bets.
Why is this happening? It doesn’t help that we know very little about the logic behind Goldman’s price target changes. According to TheFly.com, “latest developments in North America, Europe and Asia” indicate growing global interest in nuclear power. However, Goldman Sachs also sees “strong gains in uranium spot prices early in the year” as demand grows.
That’s not directly bad news for Oklo, but it at least hints at why Goldman Sachs may be less enthusiastic about the stock: If atomic fuel costs rise, nuclear power could become less economical, and demand for Oklo’s small modular nuclear power plants could diminish.
Now for the good news (and bad news). Oklo doesn’t even expect to start generating revenue until sometime next year. Profitability is unlikely to start before 2030 at the earliest. A lot of things can change between now and then—including the price of uranium.
That said, if uranium prices were to rise today, long before any of Oklo’s reactors come online, it could dampen enthusiasm for the company’s product. Profits are expected in 2030…and may take longer to materialize.
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