Nov. 10 at 1:45 PM
$CCJ
Attached is page 1 of a 49-page Mizuho analyst report on CCJ issued today entitled:
"Initiate Neutral: Justifying the premium"
Mizuho has a 'Neutral' rating on CCJ with a C
$140 (USD
$100 price target.
Mizuho's summary statement regarding CCJ in the report includes the following:
“Diversifying through the nuclear fuel chain as highest quality sector exposure:
We initiate coverage of Cameco Corp (CCO.TSX) with a Neutral rating and C
$140/sh price target. Cameco offers high quality exposure to the uranium thematic, which we think looks attractive medium-long term with demand CAGR >3.5% and upside skew to uranium prices. Cameco's earnings should grow significantly this decade as it re-contracts sales at increasingly higher spot prices, while Westinghouse captures contracts on new build nuclear reactors.
We think the fundamental narrative and earnings upcycle is strong, with consensus prices and earnings likely to be upgraded. However, recent headlines and positive catalysts have pushed the shares higher (+23% 3mth & +72% YTD) and it trades near full on most valuation metrics and is pricing ~
$110/lb real uranium in our 1.5x NAV. We expect spot uranium prices to climb higher in 2026, with a potential inventory restocking cycle driving prices; however we remain on the sidelines given the recent momentum and trading premium.
Uranium segment offers long-dated growth and optionality:
Cameco's uranium segment has strong long-term growth from both price (replacing legacy contracts with increasingly higher spot ones) and volume optionality (McArthur River/Key Lake + restarts + greenfield). However, we don't expect volume growth short-medium term until uranium prices lift towards ~
$100/lb and incentivize Cameco to bring more volume to market.
We expect equity production below current licensed capacity (~32mlb/yr) until higher prices drive the contract book. This means earnings short-term are less attractive and drives a higher multiple for its dated optionality to improving prices and volume optionality.
-- Valuation Assessment:
UPSIDE (C
$210/sh):
Our upside case assumes a higher spot uranium price of US
$100/lb. We also include further expansion of the Fuel Services business to ~C
$450M EBITDA in 2027E. Westinghouse growth continues at a faster pace; in this scenario, we assume ~C
$800M EBITDA in 2027E vs
$355-405m guidance in 2025. Due to the improving uranium outlook, there is also potential in this scenario the stock continues to trade at a higher multiple, close to 60x P/E.
BASE (C
$140/sh):
Our base case uses US
$90/lb real uranium spot price and a 45x PE multiple. We include growth from Cameco's key segments - in particular Fuel Services and Westinghouse - to drive earnings expansion over the medium-term as the uranium market continues to develop and build-out.
DOWNSIDE (C
$70/sh):
Our downside case assumes a lower spot uranium price vs current levels and our base case at US
$70/lb over 2026-27E. We also include slower growth and revenue expansion of the Fuel Services business to ~C
$350M in 2027E vs 2025 guidance of C
$500-550m. Westinghouse growth also struggles due to the weaker uranium market; in this scenario, we assume ~C
$650M adjusted EBITDA in 2027E vs
$355-405m guidance in 2025. In a weaker uranium environment, we see potential delays to growth and a potential de-rating towards 30x P/E."
(Page 1 is not available here as X does not allow me to post pages from reports on this platform)
