The Energy Report - Wed, Aug 1, 2018

Uranium Firm's Price Target Gets Raised on Recent Market News

A ROTH Capital Partners report opined on what the announcements mean for the uranium price and this company.

In a July 29 research note, analyst Joe Reagor reported that ROTH Capital Partners increased its price target on Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.American) to US$3.75 from US$2.75 in light of two pieces of recent uranium market news. The first is that Cameco will not be restarting its suspended production. The second is that the U.S. Department of Commerce is investigating the effects of uranium exports on national security. Consequently, Reagor wrote, "We believe the uranium spot price is poised to increase significantly."

Cameco's July 25 announcement that it was indefinitely shutting down its McArthur River and Key Lake operations "is paying immediate dividends for the industry," noted Reagor. Specifically, on that news, the uranium price jumped to $25 from $23 and "appears headed higher, in our view." Were the uranium price to increase substantially in the near term, the analyst argued, Cameco still probably wouldn't relaunch production because of the heavy severance costs it incurred when it initially ceased operations.

As for the U.S. government's study of uranium imports, Reagor said, "We view this as a significant positive for the U.S. uranium industry and believe the investigation could lead to a recommendation of imposing tariffs." However, due to the requisite steps and related time frames of the process, the potential benefit to the industry and, therefore Energy Fuels, would not come for at least a year.

In revising its model on Energy Fuels, ROTH extended production, 2.5 million pounds of uranium annually, from 2028 to 2033. "We believe this demonstrates the significant production growth potential of the company if the uranium price recovers to a sustainable long-term level," indicated Reagor.

ROTH has a Buy rating on Energy Fuels. Its stock is trading today at around US$2.95 per share.

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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