Uranium Energy Rose as Jefferies Started Coverage

This article first appeared on GuruFocus.

Uranium Energy (UEC) rose 0.60% premarket after Jefferies initiated coverage with a Hold rating and an $11.50 price target, below the $11.62 the stock was trading at, after a decline of nearly 15% over the past week. The firm put the equity roughly 10% above its estimate of risk-adjusted fair value.

Jefferies described Uranium Energy as offering exposure to US uranium re-shoring, with around 12 million pounds a year of licensed capacity and about 330 million pounds of resources, which would make it the country's largest uranium company. It restarted production in Wyoming and Texas, the first US greenfield in-situ recovery mine in more than a decade.

Uranium Energy runs an unhedged, spot-only strategy rather than the contracted approach most of the industry uses, leaving it exposed to a thin and volatile spot market where earnings timing depends on when management chooses to liquidate inventory. The company reported a fiscal third quarter loss of $0.11 a share against the $0.03 expected, pointing to production delays and higher unit costs. H.C. Wainwright has a Buy rating and a $26.75 price target.