Cameco Stock Gains as Jefferies Initiates 'Buy' Rating on Strong Nuclear Outlook

Shares of Cameco Corp. (NYSE:CCJ) rose on Thursday after the financial services firm Jefferies initiated coverage with a Buy rating, citing a strong outlook for nuclear power. The firm set a US price target of $138 per share and a Canadian target of C$190.

A Bullish Thesis on Nuclear Demand

In a note to clients, Jefferies analyst Laurence Alexander highlighted several key drivers for the uranium sector. The analyst pointed to a pledge by more than 30 countries to triple nuclear capacity by 2050 and rising electricity demand from hyperscale data centers needed for artificial intelligence.

Alexander also noted that the exclusion of Russian supply has pushed uranium conversion and enrichment services to prices that incentivize new production. "Combining operating discipline and a strong balance sheet, Cameco is, in our view, a prime beneficiary of the West’s nuclear build-out," the analyst stated.

Valuation and Sector View

Jefferies' valuation for Cameco is based on a sum-of-the-parts analysis, which breaks down the company's value as follows:

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• Upstream assets: $63 per share
• Conversion assets: $11 per share
• Undeveloped resources and corporate: $7 per share
• Long-term Westinghouse partnership: $51 per share

In the same note, Jefferies also initiated coverage on BWX Technologies Inc. (NYSE:BWXT) with a Buy rating and a $181 price target. The firm described BWXT as a "sole-source provider of nuclear reactors and fuels to the U.S. navy" that is positioned to benefit from the expansion of the commercial nuclear fleet without direct exposure to uranium price volatility.

Market Reaction

Following the initiation, Cameco's shares climbed 3.4% in Thursday's trading session. Shares of BWX Technologies also gained, rising 1.2%. The positive ratings provide a new catalyst for investors tracking the resurgence of the nuclear energy sector.