NuScale Power (SMR), which develops compact nuclear reactors, has strong US government backing for its technology, though it continues to lack binding commercial contracts, BofA Securities said Thursday in a report, initiating coverage of the stock with a neutral rating.

"Despite the company's strong strategic positioning, the key overhang is execution on commercialization," the report said. "Nearly five years have passed since NuScale's first Standard Design Approval, yet no US customer has advanced to a firm project commitment."

The company's use of light-water reactor technology and low-enriched uranium, rather than scarce high-assay low-enriched uranium, offers a commercial edge over competitors, BofA said.

NuScale is the "first mover" in the rigorous nuclear licensing environment, citing the Nuclear Regulatory Commission's approval for its 77 megawatt reactor design the report said.

BofA has a price objective on NuScale stock at $36.

NuScale shares rose 1.6% in recent Thursday trading.

Price: 34.35, Change: +0.56, Percent Change: +1.64