By Mackenzie Tatananni

It has been nothing short of a blockbuster year for Oklo. The nuclear start-up edged further into the public eye and positioned itself at the forefront of the growing demand for clean energy.

While shares have surged 148% this year and nearly 481% over the past 12 months, one analyst sees even more room for growth. In short, "it's all about the fuel."

In a note Monday, Seaport Research Partners analyst Jeff Campbell upgraded Oklo to Buy from Neutral with a $71 target price. Shares were up 4.5% at $52.57 on Monday, with the price target suggesting potential 35% upside.

Campbell's investment thesis hinges on Oklo's approach to fuel fabrication and recycling. The company plans to open its first Aurora nuclear powerhouse on the grounds of Idaho National Laboratory by the end of 2027, or early 2028 at the latest.

Speaking to Barron's last month, Oklo CEO Jacob DeWitte explained that fuel availability was one of the factors impeding the buildout of the U.S. nuclear industry. "We're the only company that has a site that has fuel," DeWitte said.

While is true that the Idaho National Laboratory is providing the start-up with free enriched uranium, this doesn't mean it will be fabricated into a format that the powerhouse can immediately burn, Campbell noted.

The company has plans for a fuel foundry at the same site. The timeline is cloudy at best, but Seaport believes fuel fabrication facility will be licensed first with recycling to follow.

For the time being, fuel availability remains an overhang on a broader scale. The U.S. has historically imported the vast majority of highly enriched uranium (HEU) from Russia, specifically a state-owned supplier called Tenex. However, the Prohibiting Russian Uranium Imports Act, signed into law in May 2024, effectively banned imports of Russian uranium into the U.S.

Years of "below-market priced" uranium from Tenex have impacted U.S. uranium enrichment "much like Chinese industrial policy in solar panels, rare earths, and EV batteries," Campbell wrote.

Small modular reactors like Oklo's prototypes are powered by high-assay low enriched uranium (HALEU), which has a slightly lower concentration of the isotope uranium-235 than traditional highly enriched uranium.

"Commercial HALEU enrichment remains a distant goal," Campbell asserted. He anticipates that companies will obtain fuel in the near future by downblending HEU to HALEU, or processing it into a product containing less than 20% uranium-235.

Oklo, for one, is expected to develop both metal fuel fabrication capability and the recycling of spent nuclear fuel (SNF) as an eventual substitute for HALEU in Aurora fuel cycles, Campbell said.

The analyst believes Oklo has the ability to "self-source its nuclear fuel given sufficient capital, regulatory approval, and access to SNF," making it an attractive investment.

And there's more to the bullish argument. Seaport's model indicates that after a period of "intensive capital investment" in fuel and reactors, Oklo will generate enough discretionary cash flow by 2030 to "increasingly self-fund its enterprise growth."

"We have not attempted to think about OKLO fuel fabrication and recycling as revenue-generating enterprises but rather as cost control measures," Campbell wrote. However, it's possible that other companies may seek recycled raw materials or fabricated fuel from Oklo, introducing another revenue stream.

This is all speculation for now. The company has yet to reapply for a combined license with the U.S. Nuclear Regulatory Commission, which will allow Oklo to own and operate its first powerhouse. An initial draft was denied due to "insufficient technical information" in 2022.

However, the start-up is making progress in this area. In March, Oklo said it was engaging with the NRC on a combined license pre-application readiness assessment. Seaport expects formal application to follow later this year or through mid-2026.

Positive commentary has been issued about Oklo shares recently. In a May 28 note, William Blair analysts led by Jed Dorsheimer argued that the start-up was "best positioned for market adoption" out of all the nuclear stocks in their coverage. The firm rates the stock at Outperform.

Wedbush analysts have long cheered the stock. On May 23, the firm reiterated an Outperform rating on Oklo shares and raised its target price to $55 from $45, asserting Oklo remained "a step ahead of the competition" despite a crowded market.

Others on Wall Street are more cautious. Citi Research analysts led by Vikram Bagri noted last month that Oklo "has sufficient liquidity to go through the application process and build the plant in 2027 without any outside capital."

However, it remains to be seen how Oklo will execute in the face of technological and fuel-related challenges. "We await progress on regulatory process to be more constructive," the Citi team wrote. The firm rates Oklo at Neutral.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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June 10, 2025 13:01 ET (17:01 GMT)

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