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After Cameco's October results, we updated our fair value and cut our quality score to 3.9. We now rate the people running the business and its protection from competitors lower, but we raised our score for its future growth room. We added the possibility of a public listing for the Westinghouse division and the risk of new trade barriers between the US and Canada to what we track. We also adjusted our expectations for how much uranium the company will produce over the next year.
The company reported a small loss of about $0.003 per share, which was well below the $0.23 profit analysts expected. Revenue of $430 million also fell short of the $530 million target. Management noted that the drop was largely due to a planned maintenance outage at its Key Lake mill, which was extended to ensure the facility can run reliably over the long term.
While the quarterly numbers were soft, the core business remains tied to the rising global demand for nuclear fuel. Cameco is focused on signing new contracts at higher prices and integrating its Westinghouse business to provide more stable cash flow. For long-term owners, this quarter looks like a temporary dip caused by necessary upkeep rather than a change in the company's ability to benefit from the nuclear energy trend.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
Westinghouse was selected for funding by a U.S. Department of Energy agency to work on its PowerBlock technology. This project focuses on recycling nuclear isotopes for use in advanced reactors, which could help make nuclear power more efficient and sustainable. While this grant is a positive nod to the company's technical edge, it is a research project rather than a immediate boost to profits. It supports the idea that Westinghouse provides Cameco with a steady stream of high-tech service work alongside its traditional mining business.
Source: Business Wire
Truist Financial lowered its price target for Cameco from $130 to $125 on Thursday. This is a routine adjustment that reflects recent market movement rather than a change in the firm's view of the business. Even with the lower target, analysts generally expect the stock to rise, with the average target across all firms sitting at about $134.
Source: Truist Financial
Barclays lowered its price target for Cameco from $97 to $95 but kept its rating at the equivalent of a hold. Even with this small reduction, the new target is still about 18 percent higher than where the stock trades today. The average target across all analysts who follow the company is much higher at $135. This suggests that while some firms are cautious about the stock's current price, the broader group of analysts still sees significant room for the stock to rise as demand for nuclear fuel grows.
Source: Barclays
Management has missed expectations for three quarters in a row. The business is currently harder to predict as they juggle complex mine maintenance and the integration of their new services arm.
| Expectation | |
|---|---|
| EPS | $0.30 |
| Revenue | $793M |