Cameco Edges Higher as Credit Suisse Lwrs Estimates, Keeps Neutral Rating and $30 Target Price
Credit Suisse maintained a Neutral rating and $30 target price but lowered its estimates for Cameco Corp. (CCO.TO) after its Q2 results.
"CCO reported 2Q10 adjusted FD EPS of $0.29. Adjusted EPS compares to our estimate of $0.25 (consensus $0.25). Revenues of $546 Mln were higher vs our estimate ($538Mln). Relative to our forecast, the beat was primarily on higher uranium sales volumes and tax benefits," Credit Suisse said.
"FY10 uranium sales were revised down to 30 Mln lbs (previous 31-33 Mln lbs) due customer deferrals until 2011 and reduced levels of spot market sales. Production guidance is unchanged at 21.5 Mln lbs. FY10 capital expenditures were revised down $510 Mln (from $552 Mln). Following a review of our model, we are lowering our FY10/11/12 EPS to C$1.11/C$1.15/C$1.96 from C$1.19/C$1.28/C$2.41 to reflect actual Q2 results, lower sales volumes and realized price and higher DD&A."
On Valuation, Credit Suisse said: "Our TP of $30 is based on 1.2x our revised NAVPS of $25.41/share. Our multiples currently reflect the low-end of historical range of 1-1.6x for uranium equities. We believe CCO will trade at a modest premium on P/NAV due to its vertical integration in the nuclear fuel cycle (from mining to nuclear operations) and non-mining business."
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