Analyst Actions: Credit Suisse on Cameco Corp. - "Investor Day Highlights: Notes from the Road"

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Event: Cameco Corp. ( CCO ) recently hosted an Investor Day and operations tour of its McArthur River mine in Saskatchewan. Following our visit, we are maintaining our Neutral rating and TP of C$28/share.

Impact: Neutral. CCO was very confident on its progress at Cigar Lake and its ability to meet its first ore production target of 4Q13, as well as the long-term prospects for future uranium supply/demand. While near-term prospects for uranium pricing are relatively weak, CCO sees prices bottoming around current levels, with excess inventory management having a stabilizing effect on prices.

McArthur River Operations Update: CCO has thus far been successful at mitigating the risk to production in 2013 associated with the transition to mining the upper areas of Zone #4 through improvements on cycle times, using blast-hole stoping in smaller, lower-grade areas of the mine away from the freezewalls, and sequence changes around Zone #2-Panel 5. At mid-year, CCO's share of production at McArthur River was at 48% of its annual production target of 13.1Mln lbs (or 6.3Mln lbs).

Valuation: Our TP of C$28 is based on 1.2x our cash-adjusted NAVPS (C$23) or the mid-point of the historical valuation range of 1.2-1.4x (peak valuation 1.6x). We remain Neutral on Cameco as we believe the shares will reflect general sentiment towards uranium/nuclear industry fundamentals, which we view as tepid in the medium-term. Equity catalysts and positive uranium price momentum will be driven by stronger evidence of the following key factors over the next 12 months: (i) clarity surrounding the nuclear outlook for Japan; (ii) resumption of approvals for new nuclear reactors in China; (iii) clarity over Russian supplies post expiry of the HEU supply agreement in 2013; and (iv) slower uranium production growth rates from Kazakhstan



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: CCO

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