Al Root

Nuclear power is enjoying a renaissance -- with investors. They might want to take note of a recent deal by a relatively small aerospace & defense supplier that increased its nuclear business.

On Monday, Crane announced it was buying the Precision Sensors & Instrumentation business from Baker Hughes for about $1 billion.

Baker Hughes' "PSI is a unique asset with...iconic brands that are highly complementary to both of our segments," said Crane CEO Max Mitchell in a news release.

Crane specializes in technologies for sensing, temperature management, and hydraulics, among other things. It generated $2.1 billion in 2024 revenue, with $900 million coming from its aerospace & electronics segment and the balance from its process flow technologies segment.

About 10% of the process flow revenue came from the nuclear business. PSI doubles that, wrote Deutsche Bank analyst Scott Deutschle in a Tuesday report. That will raise nuclear revenue to roughly 10% of total sales, enough for investors to take notice.

They have taken notice of other nuclear stocks. Nuclear power is seen as a way to meet the growing demand from power-hungry artificial intelligence data centers being built by Meta Platforms, Amazon.com, Alphabet, and others without generating carbon emissions -- the primary cause blamed for global climate change.

Coming into Tuesday trading, shares of nuclear-linked companies GE Vernova, NuScale Power, Constellation Energy, and Cameco were up about 150% over the past 12 months. NuScale isn't profitable yet, but the other three trade for an average of about 55 times estimated 2025 earnings. The S&P 500 trades for about 23 times.

Crane stock trades for about 34 times and was up about 31% over the past 12 months. Solid, but some of those gains come from the solid outlook for commercial aerospace. Shares of GE Vernova sibling GE Aerospace were up 55% and trade for about 44 times estimated 2025 earnings.

"The key [deal] takeaway is that Crane's commercial nuclear exposure increases enough with this acquisition to make it a bona fide way to participate in this thematic," added Deuschle. "We are very bullish on what this deal should mean for the revision outlook and the multiple, and we think this deal likely marks the company's next phase of transformation."

He rates Crane stock a Buy and has a $226 price target for shares. Overall, 73% of analysts covering the company rate the shares a Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Crane stock is about $198 a share.

Crane stock was up 1.6% at $188.90 in early trading Tuesday, while the S&P 500 and Dow Jones Industrial Average were up 0.2% and flat, respectively.

Write to Al Root at allen.root@dowjones.com

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June 10, 2025 11:04 ET (15:04 GMT)

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