Uranium Spot Prices Could Rise Above $50/lb in 12 Months, Says H.C. Wainwright (URZ) (UEC) (URG)
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H.C. Wainwright analyst Jeffrey Wright thinks uranium spot prices could rise above $50 per lb in the next twelve months. The reported noted a positive decision regarding the restart of two Japanese nuclear reactors, which could alleviate psychological pressures on the uranium market.
"Since falling below $40 per lb in 2013, spot prices have been unable to breach the $40 per lb mark until now. The recent recovery in spot prices from a little above $28 per lb earlier this year to more than $40 per lb, is encouraging for US uranium producers. We believe uranium spot prices could rise above $50 per lb in the next twelve months, which could support both sustainable production and exploration activities," said Wright.
"A key consideration in the uranium market is that historically, this has been a thinly traded environment with fewer participants than other commodity markets. As such, a less liquid private marketplace, the uranium spot market can be influenced by one or a small group of participants. At present, multiple US utilities with nuclear power plants are beginning to secure long-term uranium supply for 2017-2018 after not participating in the market in size for a couple years. We believe this collective demand has lifted the spot uranium market to its current level and also expect this trend to continue in the near term," continued the analyst.
"The governor of Japan's Kagoshima prefecture agreed to move forward with the restart of the two Sendai nuclear reactors following an affirmative vote by the Kagoshima assembly. As we noted in our uranium market piece published October 28, “Uranium Market Update: Awakening and Showing Signs of Life,” we anticipated a successful vote with respect to the restart of the Sendai reactors. While we believe the restart of the reactors does not change the larger uranium supply-demand picture, we believe a successful restart at the two reactors should alleviate some of the psychological pressures that have been plaguing the uranium market since Fukushima," added the analyst. "If successful, we believe the Sendai restarts could provide a clear path for future Japanese reactors to come back online."
H.C. Wainwright maintained a Buy rating on Uranium Energy Corp (NYSE: UEC) with a price target of $3.75. Uranerz Energy (NYSE: URZ) was maintained at Buy with a price target of $2. Ur-energy, Inc. (NYSE: URG) was maintained a Buy with a price target of $2.25.
Shares of Uranium Energy Corp closed at $1.72 yesterday.
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