Cameco upgraded to Buy at UBS after 18% pullback on market sentiment

UBS upgraded Cameco Corp. to Buy from Neutral, citing a strengthening uranium bull case not reflected in the stock's 18% monthly decline.

"The uranium bull case has strengthened this year, with long-term contract prices at record highs and accelerating utility contracting," the UBS analyst said.

UBS kept its price target unchanged at C$166 per share, based on a 45x multiple on 2028 estimated earnings. Term contract prices have risen to $96 per pound, up 20% year-over-year, with recent tenders attracting large volumes and contract structures incorporating price floors of $75 to $77 per pound and ceilings as high as $155 per pound.

The upgrade follows a 27% decline over the past six months that UBS said reflects broader market and AI-related sentiment rather than any change in fundamentals. Shares rose 0.7% Monday on the New York Stock Exchange.

Cameco represents the clearest and most liquid global exposure to the nuclear thematic, according to UBS, which expects the stock to remain structurally crowded given its scarcity value and industry leadership.

Contracting activity is now concentrated on deliveries between 2031 and 2035, with some utilities extending procurement plans into the 2040s, highlighting growing concern over long-term supply availability. UBS views record term prices and accelerating utility procurement as evidence of a structurally tightening uranium market.

Heightened geopolitical risk further shows the strategic value of uranium supply, the bank said. Events UBS is watching this year include further contract price upside, meaningful AP1000 reactor announcements, plans for physical uranium futures, and continued supply challenges among incumbent producers.

The upgrade suggests that UBS sees the recent selloff as disconnected from improving industry fundamentals. Investors will watch for further utility contracting announcements and AP1000 deployment updates as the next potential triggers for the stock.

This article is for informational purposes only and does not constitute investment advice.