In a Jan. 26 research note, analyst Heiko Ihle reported that H.C. Wainwright & Co. increased its target price on Uranium Energy Corp. (UEC:NYSE AMERICAN) to $3.60 per share from $3.30. This compares to $1.64, the current per share price.
The higher target price, Ihle explained, resulted from the financial institution lowering its discount rate on Uranium Energy's asset base (to 7.5% from 8%) due to various positive industry developments and raising its per-pound valuation of the company's ex-Texas assets (to $3.50 from $3.15).
Also of note is that Uranium Energy "remains well positioned to leverage its low-cost in-situ recovery (ISR) operations to support a recently enacted bill that is set to create a U.S. uranium reserve during 2021," Ihle indicated.
He reiterated that the legislation appropriated $75 million for the purchase of domestically produced uranium, an estimated 17–19 million pounds (17–19 Mlb) this year. "We expect the new administration to support and continue to implement this initiative, which had bipartisan support," Ihle noted.
Ihle pointed out that Uranium Energy is fully permitted and can produce about 4 Mlb per year. Even a modest bump up in the uranium spot price would be enough for the company to likely restart production at its Palangana ISR mine in Texas; cash costs were $21.77/lb when the mine was operational.
Further, the analyst noted, Uranium Energy continues to advance some of its other assets. For instance, it is currently working to complete zone delineation drilling in expanded production area 1 and monitor well installation at Burke Hollow, also in Texas. A prefeasibility study is in progress of its Reno Creek ISR project in Wyoming, "the largest permitted, preconstruction ISR uranium project within the U.S."
H.C. Wainwright & Co. has a Buy rating on Uranium Energy.
"Looking ahead, we maintain our longer-term expectation for higher uranium prices given current global developments that could ultimately support favorable production decisions at one or more properties in Uranium Energy's portfolio of assets," Ihle wrote.
Read what other experts are saying about:
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.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Uranium Energy Corp. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Uranium Energy Corp., a company mentioned in this article.
Disclosures from H.C. Wainwright & Co., Uranium Energy Corp., Target Price Revision, January 26, 2021
I, Heiko F. Ihle, CFA, Tyler Bisset and Marcus Giannini, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Uranium Energy Corp. and Uranium Royalty Corp. (including, without limitation, any option, right, warrant, future, long or short position).
As of December 31, 2020, neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Uranium Energy Corp. and Uranium Royalty Corp.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did receive compensation from Uranium Energy Corp. and Uranium Royalty Corp. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Uranium Energy Corp. during the past 12 months.
The Firm does not make a market in Uranium Energy Corp. and Uranium Royalty Corp. as of the date of this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.