Cameco Corp Up 2% as UBS Analyzes its Q1
UBS has cut its 12 month price target on Cameco Corp (CCO.TO) by $3 to $39 but kept a Buy rating after its Q1 result and outlook statement.
CCO reported adj EPS of $0.21, below UBS and consensus:
"Year-over-year earnings were down in all three businesses. CCO expects deliveries will be weighted heavily to the second half of the year, with approximately one-third of 2011 sales volumes in the fourth quarter. Management noted that it expects deliveries in the second quarter to be the lowest for the year."
2011 guidance updates:
"CCO decreased its 2011 uranium revenue guidance from an increase of 15-20% year-over-year to an increase of 10-15% due to stronger C$ assumptions. Full year U3O8 production and sales volume forecasts were unchanged at 21.9Mlbs and 31-33Mlbs respectively. Capex guidance was increased from $575M to $620M to include the company's investment in Talvivaara."
CCO revised down its uranium demand outlook following Fukushima:
"CCO noted that much of the growth is still expected to come from countries that have recently reconfirmed their commitment to include nuclear as a part of their energy mix. However, many of these countries may slow down their programs so. CCO revised down its estimates for world uranium market demand, net increase in reactors and new uranium supply required over the next ten years."
Valuation: price target down from $42 to $39; Buy rating maintained:
"We revise our 2011 EPS estimate from $1.41 to $1.27 to reflect updated estimates, accounting under IFRS and updated electricity forecasts. Applying a P/NAV multiple of 1.4x to our NAV of C$27.56/share, we derive our price target of C$39. Given the implied return, we rate the shares Buy."
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