This uranium miner could jump 11% on nuclear demand, low geopolitical risk

Canadian uranium miner Cameco Corporation is well positioned for growth on rising demand for nuclear power in the U.S. and less exposure to global geopolitical risk, according to Goldman Sachs. Goldman raised its 12-month price target for Cameco to $64 per share implying about 11% upside from Tuesday’s close of $57.46, as uranium prices are expected to rise as demand outstrips supply. Cameco’s stock has gained about 33% so far this year. “We reiterate our constructive view on the stock and continue to highlight the company’s integrated business model across the fuel cycle,” analyst Neil Mehta told clients in a note Wednesday. CCJ YTD mountain Cameco, YTD Cameco is integrated across uranium mining, conversion and fabrication as well nuclear services through its stake in Westinghouse, Mehta wrote. Cameco is also an attractive partner for Western utilities because the company has relatively low geopolitical risk. Its mining operations are principally based in Canada and the U.S. with the exception of one operation in Kazakhstan. Uranium prices are also supportive for Cameco with contracts right now seeing a floor of around $70 per pound and a ceiling of $130 per pound. This puts the uranium price midpoint at around $100 which is well above current spot levels of about $80 per pound, according to Goldman. Cameco has potential upside from its 49% stake in Westinghouse, a nuclear services company that is expected to play a major role in new power plant builds with its AP1000 reactor, according to Goldman. Cameco is still working through the financial impact of its Westinghouse acquisition, but the miner sees a 6% to 10% growth rate over the next five years for the nuclear services company. Chief Financial Officer Grant Isaac told investors on the company’s Nov. 7 earnings call that Cameco’s outlook for Westinghouse is conservative and will likely be adjusted as final investment decisions on new reactor builds come in. “Westinghouse is incredibly well-positioned given all of the tailwinds in the nuclear space,” Isaac said.