Cameco Stock Gains After Bernstein Calls It Undervalued, Retail Sentiment Improves But Still Lingers In Bearish Zone

The brokerage said that Cameco, an integrated nuclear company, has several near-term and long-term catalysts that would enable a re-rating of the stock.

Cameco's (CCJ) stock gained 1.6% on Tuesday and continued climbing after the closing bell after Bernstein initiated coverage of the uranium fuel producer with an ‘outperform’ rating.

The brokerage also set a price target of $52 for the stock, which implies an upside of 26.3% from Monday’s closing price.

Bernstein said that nuclear fuel would be increasingly important for power generation, and its model shows that the existing supply would be insufficient to match the rise in demand for nuclear power.

The brokerage expects uranium prices to rise in response to the spike in demand.

Bernstein said that Cameco, an integrated nuclear company, is undervalued due to the recent fall in uranium prices and has several near-term and long-term catalysts that would enable a re-rating of the stock.

In February, Cameco had topped Wall Street’s expectations for quarterly profit on strong uranium prices.

It plans to produce 18 million pounds of uranium at the McArthur River/Key Lake and Cigar Lake mines in 2025.

Retail sentiment on Stocktwits remained in the ‘bearish’ (39/100) territory, albeit with a higher score than a day ago, while retail chatter was ‘low.’

One retail trader expected the sector to grow as the “energy and security sector(s) prepare for an epic run coming years.”

Cameco also holds a 49% interest in nuclear reactor maker Westinghouse.

The company expects a compound annual growth rate in revenue from Westinghouse’s core business between 6% and 8%.

Cameco shares have fallen 18.5% year-to-date (YTD).

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