Cameco: BMO raises price target to $42 on positive uranium price move
On March 30, BMO Capital Markets raised its rating and 12-month price target to Cameco (TSX:CCO). BMO raised its market performance rating to outperform and raised its price target from $33 to $42. The analyst said the increase was due to the limited number of listed producers, an increase in the number of countries wanting low-carbon nuclear generation and security of supply becoming a top-of-mind issue.
“Cameco’s advantageous geographic production base and position as the largest and most liquid uranium stock means its stock price should rise further.”
Cameco currently has 13 analysts covering the stock with a 12-month average price target of C$38.53, which represents a 6% upside from the current stock price. Of the 13 analysts, 4 have strong buy ratings, 7 have buy ratings while the last 2 analysts have a hold rating on the stock. The top of the street sits at C$45 from TD Securities, which is a 24% upside from the current price.
BMO went ahead and raised its short-term uranium prices by 13% for 2022 and 3% for 2023, to an average of US$51/lb and US$46/lb respectively. For the company, this means that it now expects a “modest” increase in Cameco’s short-term cash flow as well as its EBITDA.
The BMO analyst says the shift in global sentiment will work for Cameco as support for nuclear power continues to grow in countries around the world, meaning governments are considering either extending the lifespan of nuclear facilities in operation, or to reopen beforehand. closed nuclear power plants. Either option will increase demand in the near term, which “supports increasingly positive sentiment in the sector.”
Finally, they add that the tragic events in Ukraine “have put an emphasis on security of supply”, which includes many commodities such as uranium, as it offers a low-carbon alternative to fossil fuels. BMO believes that due to Cameco’s “advantageous location” of being close to the world’s largest nuclear fleet in the United States, “we believe Cameco is increasingly likely to benefit from positive contract discussions with public services after the promising start reported this year”.
Below you can see BMO’s updated estimates for 2022 and 2023.
Information for this briefing was found via Sedar and Refinitiv. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.