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After a strong performance last week, shares of NuScale Power (NYSE: SMR) have continued to climb this week. That earlier surge was prompted by news that the Department of Energy planned to provide $900 million in funding to support the deployment of small modular reactors (SMRs) of the type that NuScale is developing. But the catalyst for the nuclear energy stock's latest rise appears to have been an analyst's auspicious outlook on the company's future.

According to data provided by S&P Global Market Intelligence, from the end of last week's trading session through the close of trading Thursday, NuScale Power rose by 19.6%.

A new take on how high NuScale Power can run

On Thursday morning, B. Riley Securities analyst Ryan Pfingst hiked his price target on NuScale to $14 from $8. From its closing price of $11.52 on Wednesday, Pfingst's target implies an upside of about 22%.

According to TheFly.com, Pfingst predicated his new price target on the company's improved financial situation in light of the recently announced government funding for small modular reactor projects. Additionally, Pfingst believes that this government funding reduces the likelihood that the company will have to raise capital through the issuance of equity.

NuScale Power is still early in its development arc, and its cash position has dwindled from about $218 million at the end of March 2023 to approximately $132 million as of March 31, 2024.

Should you power your portfolio with NuScale Power now?

With the explosion in popularity of generative AI, the power demands placed on the grid by data centers are growing considerably. NuScale Power proposes that its reactors could provide reliable new electricity supply to meet that rising demand, so it's unsurprising that growth investors are adding the innovative nuclear energy stock to their portfolios.

But investors will want to tread carefully here. It's uncertain that the company's endeavors can be profitable as it has no projects in operation yet. Consequently, only those who are comfortable with high-risk investments should consider buying NuScale Power stock.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.