Goldman Sachs Starts Cameco Corporation (CCJ) at Buy

April 1, 2024 4:26 AM EDT
Get Alerts CCJ Hot Sheet
Price: $49.59 -1.74%

Rating Summary:
    8 Buy, 7 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 5 | New: 29
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Goldman Sachs analyst Neil Mehta initiates coverage on Cameco Corporation (NYSE: CCJ) with a Buy rating and a price target of $55.00.

The analyst comments "We are initiating coverage on CCJ/CCO.TO with a Buy rating and US$55/C$74 price targets, implying ~30% upside from current levels. Cameco Corporation (CCJ, Market Cap of US$18 bn) is one of the world’s largest nuclear fuel suppliers, with operations in Canada, United States, Kazakhstan and Australia. We believe that shares of Cameco provide investors with an attractive means to gain exposure to the entire Uranium/Nuclear fuel value chain in an environment where increased demand and higher prices should lead to meaningful estimate revisions by consensus. We believe that prices are likely to average US$95/lb (spot) and ~US$68/lbs (realized price for CCJ) over the next several years on a normalized basis. This is ~170%/~65% higher than the historical figures (2013-2023 average), which we believe is supported by a combination of meaningful supply deficit and a miscalibration of enrichment requirement assumptions that is potentially understating demand. We believe a 0.30% tails requirement is more appropriate for longer-term demand expectations, compared to industry assumptions (per IAEA) of 0.25% as increased demand for enrichment facilities could introduce inefficiencies in the industry’s enrichment capacities. We believe this is likely to drive an incremental ~14% increase in demand vs current industry estimates in the base case of expected growth. We also believe that there is potential for migration of uranium sourcing requirements from other regions to Canada/Cameco, driven by increasing focus on derisking supply as a result of geopolitical challenges, particularly for the US and France, together comprising ~35% of global demand. As such, our estimates for EBITDA and EPS are ~15% and ~15% above consensus on average for 2024-2027, as we see strong estimate change potential for the company."

For an analyst ratings summary and ratings history on Cameco Corporation click here. For more ratings news on Cameco Corporation click here.

Shares of Cameco Corporation closed at $43.32 yesterday.

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