Analysts raise uranium targets as producers show signs of life

One year after Japan’s Fukushima nuclear crisis, analysts are hiking ratings and value targets on uranium companies that have posted a few impressive gains of late.In Canada, Uranium One Inc. shares are up 37% year to date and Cameco Corp.’s include climbed 14%. 

The gains are mainly notable because both stocks recently pulled back along with other global equities on resurgent fears about the eurozone.“We view this pullback as attractive entry points as we don’t believe moreover stock is accurately reflecting the significant increase in uranium prices we are forecasting,” said Tyler Langton, an analyst at JPMorgan.Stronger predicted uranium prices are the major driver behind the improved performance of uranium companies this year.

 Uranium has a current spot price of US$52 a pound, but JPMorgan forecasts that can rise to US$80 by 2014 as supply deficits catch up with demand.Uranium prices are still down 20% from the start of 2011 since of negative sentiment about the industry. The negativity reached a peak in March 2011 when Japan struggled to rein in four unstable reactors whose cooling systems were injured during a magnitude 9.0 earthquake.

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Uranium prices to rebound as Japan disaster memories fade

Uranium prices slumped in the come around of the nuclear disaster in Japan earlier this year, but it looks like any price fault in 2011 will be short-lived as memories fade and demand for electricity continues to grow. Adam Schatzker, forecaster with RBC Capital Markets, notes that China, India and South Korea are maintain their nuclear build plans even as Saudi Arabia, the United Arab Emirates, Turkey and Vietnam include announce new nuclear plans as well.

“The market will start in on to recover in 2012 as the events at Fukushima become less of a driving force and the supply-demand essentials re-assert themselves,” he said in a note. “There is not enough uranium production, either current or planned, to gratify reactor needs, initial core requirements and inventory for new reactors. A sustainably higher cost should help resolve this gap.”

Germany’s threats to shut down all of its reactors will be upturned, and the threat of Japan final its reactors are unlikely, his said.Mr. Schatzker forecasts uranium prices to be range-bound at less than US$60 a pound for the rest of 2011 and may yet drop under US$50 a pound depending on what Japanese utilities do with planned deliveries for the remainder of the year.