The idea of a nuclear renaissance has been spoken about in the past, but this time, there are indications that it might actually become a reality. According to Morgan Stanley, Curtiss-Wright, a company that provides essential components to nuclear plants, could be a significant player in this sector. The investment bank has raised Curtiss-Wright’s price target by $46 to $330, suggesting a potential upside of over 17% from the previous week’s closing price. This increase is not only a mark-to-market acknowledgment of Curtiss-Wright’s recent uptrend, but also underscores the company’s underappreciated growth potential in the context of the nuclear renaissance theme.
Curtiss-Wright holds a key position in the nuclear industry by manufacturing crucial reactor coolant pumps for Westinghouse’s third-generation AP1000 nuclear plants. With a growing interest in these builds, particularly in Europe, Curtiss-Wright stands to benefit from potential future sales of AP1000 reactors. The analysts at Morgan Stanley, led by Kristine Liwag, view these upcoming sales as a promising source of upside for Curtiss-Wright. Despite previous setbacks in the nuclear sector, including political emphasis on renewables and safety concerns post the Fukushima nuclear disaster in 2011, there seems to be a renewed enthusiasm for nuclear energy.
The landscape of the energy sector is evolving rapidly. As electricity demand rises, driven in part by the growth of data centers and artificial intelligence, there is a need for reliable and carbon-free sources of energy. With the modernization of existing nuclear plants and the potential for new plant construction, Curtiss-Wright is well-positioned to capitalize on these opportunities. In Europe alone, there are projections for 20 to 25 new third-generation nuclear power plant builds in the next decade, signaling a shift towards energy independence in the region.
In Morgan Stanley’s projections, if Westinghouse secures 50% of the contracts for building AP1000 reactors, Curtiss-Wright could expect to generate substantial revenue from its reactor coolant pumps. Each plant requires four such pumps, highlighting the significant revenue potential for Curtiss-Wright in this space. Additionally, the modernization of existing nuclear plants in the U.S. presents a considerable opportunity for the company, with estimates suggesting a $7 billion market through 2050. In a bullish scenario, Curtiss-Wright could see revenue of $4.9 billion on AP1000 builds through 2050, leading to a significant increase in the company’s valuation.
As the energy landscape undergoes a transformation and the interest in nuclear power sees a resurgence, companies like Curtiss-Wright are poised to benefit from these changes. With a focus on providing essential components to nuclear plants and leveraging opportunities in modernization and new plant constructions, Curtiss-Wright could emerge as a key player in the evolving nuclear renaissance. While challenges and uncertainties remain, the potential for growth and innovation in the nuclear energy sector presents a promising outlook for companies like Curtiss-Wright.