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Canaccord Genuity initiated coverage of Oklo stock today with a Buy rating.
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Oklo is not expected to make its first profits before 2030.
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But Canaccord bases its approval on a forecast of nuclear energy by 2050.
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10 stocks we like better than Oklo ›
Nuclear reactor builder Ok hey (Nyse: Oklo) The stock jumped 2.4% through 11:25 a.m. ET Thursday.
For that, you can thank the friendly analysts at Canaccord Genuity.
Canaccord Genuity initiated coverage of nuclear company Oklo with a Buy rating and a $175 price target on the $137 stock, as StreetInsider.com reported today. This may seem like a high price for a zero-revenue startup that isn’t expected to generate revenue for a few years, nor make its first profit until 2030. But here’s the problem:
Canaccord is not thinking about 2030 here. It goes much further, with “our model which extends until 2050”.
Looking ahead 25 years, Canaccord sees “the emergence of a new nuclear era, an era where nuclear assets grow not only in volume, but also as a percentage of the global energy mix”. Canaccord expects Oklo to play an outsized role in that future. “Vertically integrated”, benefiting from a “cleverly constructed strategy” for the deployment of small nuclear power plants and good “technological capabilities”, Canaccord is betting on Oklo not only to survive until 2030, but also to continue to benefit from the new nuclear renaissance.
What makes Canaccord so confident about Oklo? With $530 million in the bank and a cash burn rate of $53 million, it appears at first glance that Oklo has all the cash it needs (and more) to last until profits arrive in 2030.
The problem is that most analysts believe Oklo’s cash burn will accelerate significantly as it approaches commercialization (and profit). Cash consumption over the next five years could actually reach $1.5 billion, more than Oklo currently has.
As bright as its future is, Oklo still needs to find even more cash or it will go bankrupt.
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