In a concerted effort to address the global shortage of medical isotopes used in cancer treatment, Energy Fuels Inc. UUUU recently acquired RadTran LLC.
Energy Fuels and RadTran have been collaborating since July 2021, using RadTran's expertise in extracting radium-226 ("Ra-226") and radium-228 ("Ra-228") in the uranium process streams at Energy Fuels' White Mesa Mill in Utah. These isotopes then can be used for producing actinium-225 ("Ac-225"), lead-212 ("Pb-212") and other essential isotopes that play a crucial role in emerging targeted alpha therapies (“TAT”) for cancer treatment.
Energy Fuels Capitalizes on Isotope Shortage
Over 30 clinical trials are evaluating Ac-225, with several in the final pre-approval stage focusing on neuroendocrine tumors and leukemia. Numerous earlier-stage trials have already been initiated to address common cancers, including prostate cancer. However, the global scarcity of Ra-226 and Ra-228 is posing a significant hurdle to the advancement and commercialization of these therapies.
Energy Fuels intends to solve this supply bottleneck. The company has a competitive edge, given that its White Mesa Mill (with a licensed capacity of more than 8 million pounds of uranium per year) is the only conventional uranium mill currently operating in the United States. Using RadTran’s know-how, the company will recover valuable isotopes from its process streams at the mill. UUUU will recycle the material that would otherwise have been lost to disposal and contribute to producing life-saving cancer treatments.
UUUU’s Strategic Roadmap
Energy Fuels is finalizing engineering on its research and development pilot facility for Ra-226 production. It plans to produce initial quantities of Ra-226 for testing by end-users by 2024. Commercial-scale production of Ra-226 (and potentially Ra-228) is planned for 2026-2028.
Energy Fuels’ YTD Price Performance
Year to date, UUUU shares have lost 33.7% against a rise of 12.1% for the industry. The company has also underperformed the broader Zacks Basic Materials sector’s decline of 3.3% and the S&P 500’s climb of 17.9%.
UUUU's YTD Performance
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Near-Term Factors Weighing on UUUU Stock
Energy Fuel’s share price reflects the impacts of the downtrend in uranium prices so far this year. Recently, the world’s top uranium miner, Kazatomprom, raised its production guidance for the year, dispelling supply concerns. Uranium prices currently stand at $80 per pound, marking a 12% decline since the beginning of this year.
Energy Fuel’s recent endeavors to grow the REE business (the acquisition of Base Resources in April 2024 and the joint venture agreement with Astron to develop the Donald rare earth project) are being perceived as risky, given China’s dominance in the market.
UUUU has temporarily paused ore shipments from its Pinyon mine in Arizona following concerns raised by the Navajo nation regarding the transport of radioactive materials through the Navajo lands. Even though efforts are underway to address these issues, the delay would put the company’s 2024 production guidance at risk. It might also increase costs if the company has to look for other transport routes.
UUUU Valuation Looks Stretched
Energy Fuels is currently trading at a forward price to sales ratio of 6.37, well above the industry average of 3.16. The company is, however, cheaper than peers Cameco Corporation CCJ and Uranium Energy’s UEC price-to-sales ratios of 11.52 and 19.77, respectively.
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Energy Fuel's 2025 Earnings Estimates Suggest Turnaround
UUUU’s 2024 earnings estimates have been unchanged over the past 60 days. The estimate is pegged at a loss of 11 cents for 2024, which suggests a slight improvement from the loss of 12 cents reported in 2023.
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The Zacks Consensus Estimate for Energy Fuels’ 2025 earnings has moved down in the past 60 days to 9 cents. Notwithstanding the downward activity, this indicates a return to profitability for the company.
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UUUU’s Long-Term Prospects Promising
The demand for uranium is surging due to factors like growing electricity needs, decarbonization efforts and data center expansion. As existing mines deplete resources, new production will be needed to meet existing and future demand. Supply pressure and solid demand fundamentals point to higher sustained uranium prices.
Energy Fuels has four long-term contracts with major U.S. nuclear utilities that require deliveries of base quantities of 2.8 million pounds of uranium through 2030. The company is preparing two additional mines in Colorado and Wyoming (Whirlwind and Nichols Ranch), which could increase uranium production to a run rate of more than two million pounds of uranium per year as early as 2026.
The company has a debt-free balance sheet, which is commendable compared with the industry’s debt-to-capital ratio of 29.1%. This enables Energy Fuels to advance its growth plans to capitalize on the expected surge in uranium demand. Energy Fuels’ peer Cameco has a debt-to-capital ratio of 18.5%.
Time to Keep an Eye on UUUU Stock?
Leveraging RadTran’s know-how, Energy Fuels will recover valuable isotopes from its existing processing streams, which are in high demand in cancer treatments. However, near-term concerns include increasing exposure to REEs, higher expansion-related costs and shipment issues at Pinyon. Given these factors and UUUU’s premium valuation metrics, investors should monitor the company’s developments closely for a more appropriate entry point.
Existing stakeholders should maintain their position in this Zacks Rank #3 (Hold) stock to benefit from the solid long-term fundamentals of the uranium markets. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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