Mining Sector Ideas

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>>> Uranium Miner Cameco Catches an Upgrade. Russia Is the Reason.


Barron's

By Al Root

April 11, 2022


https://www.barrons.com/articles/uranium-cameco-russia-ukraine-51649690687?siteid=yhoof2


Cameco operates a uranium-processing plant in Port Hope, Ontario, Canada.

Uranium miner Cameco caught an upgrade Monday from the Street, which pushed the stock higher initially. Things are pretty good for the company right now—and they’re set to get better.

RBC analyst Andrew Wong changed his rating on Cameco (ticker: CCJ) stock to Buy from Hold. His price target went to $50CDN a share from $30. The U.S. dollar price targets are roughly $40 and $24, respectively. Cameco has both U.S. and Canadian stock listings.

Shares were up about 1.4% in early trading, then dipped into the red. The S&P 500 and Dow Jones Industrial Average were down 1.2% and 0.5%, respectively.

The stock has been strong. Shares are up roughly 50% since Russia invaded Ukraine in late February, for primarily two reasons.

First, the war raised the possibility that Europe would turn from using less natural gas-generated power—the continent’s countries buy large supplies of natural gas from Russia—and more nuclear power. And second, Russia is also a supplier of uranium to nuclear-power plants. If that supply gets hit by sanctions from the West, commodity markets would tighten even more, and Cameco more than like would pick up more business as one of the world’s largest uranium producers.

The Russia-Ukraine war was a key factor in Wong’s upgrade.

“We believe the Russia/Ukraine war and subsequent shift in Western markets away from exposure to Russia have fundamentally changed the uranium market outlook and long-term market structure,” wrote the analyst Monday. “We see Cameco as best-positioned to meet market needs in this transition with Western-based proven and potential production along the nuclear fuel cycle.”

All analysts covering Cameco rate shares Buy; before the invasion, about 85% of analysts recommended the stock. The average Buy-rating ratio for stocks in the S&P is 58%.

The average analyst price target is about $32 a share, up from $29 just before the invasion.

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