Cameco Corp

Key Reasons for Buy

• Strong Segmental Performance and Strategic Alignment: Cameco Corporation’s 2024 financial performance benefitted significantly from strong fourth-quarter results in both its uranium and Westinghouse segments. Despite reporting lower net earnings and adjusted net earnings compared to 2023—mainly due to purchase accounting impacts related to the Westinghouse acquisition—the company demonstrated improvement across several key financial indicators. President and CEO Tim Gitzel reaffirmed Cameco’s confidence in sustaining strong financial results in 2025, supported by robust market fundamentals across the nuclear fuel cycle and the continued strategic benefits derived from its investment in Westinghouse.
• Resilience in a Strengthening Nuclear Market: The global nuclear sector experienced another year of momentum in 2024, with growing support for both existing nuclear infrastructure and new reactor projects. Cameco views the outlook for nuclear energy and fuel fundamentals as the most favorable in decades, driven by increasing geopolitical uncertainty and renewed emphasis on energy and national security. This trend is reinforcing nuclear power’s role in a durable growth phase, boosting demand and contracting activity throughout the cycle. Cameco believes supply-side risks in the nuclear fuel market now outweigh demand-side risks, further validating its cautious yet opportunistic contracting approach.
• Robust Uranium and Fuel Services Operations: Cameco reported delivery of 33.6 million pounds of uranium in 2024 at an average realized price of $79.70 per pound. Its share of production stood at 23.4 million pounds, slightly above the projected 23.1 million pounds, supported by record output at the Key Lake mill. Additionally, the fuel services segment delivered 12.1 million kgU at an average realized price of $37.87 per kgU, with production totaling 13.5 million kgU. The company's contracting portfolio continues to grow, with approximately 220 million pounds of uranium and over 85 million kgU of UF6 under long-term commitments, securing a stable outlook for future operations.
• Westinghouse Contribution and Future Potential: Westinghouse, in which Cameco holds a significant stake, contributed an adjusted EBITDA of $483 million in 2024. Although Cameco’s share of Westinghouse’s net loss amounted to $218 million—primarily due to acquisition-related accounting impacts—the underlying performance remains strong. A resolution of the technology and export dispute with Korean partners in early 2025 has unlocked additional deployment opportunities outside of South Korea. Westinghouse’s prospects remain bright, with active interest in the AP1000® technology in Poland, Bulgaria, Ukraine, and Slovenia, reinforcing its long-term strategic value to Cameco.
• Strategic Investments and Operational Flexibility: Cameco remains focused on aligning its production levels with long-term contracting commitments and prevailing market conditions. For 2025, production targets at McArthur River/Key Lake and Cigar Lake are set at 18 million pounds each (100% basis), while fuel services production is expected to range between 13 million and 14 million kgU. Capital projects aimed at improving infrastructure reliability and removing bottlenecks—such as freezing advancements at McArthur River—underscore Cameco’s emphasis on future flexibility. Despite uncertainties surrounding production at JV Inkai in Kazakhstan due to regulatory delays and supply chain issues, Cameco is actively collaborating with Kazatomprom to manage obligations and ensure delivery continuity.
• Financial Strength and Shareholder Returns: Cameco ended 2024 with $600 million in cash and equivalents, total debt of $1.3 billion, and an undrawn $1.0 billion credit facility. The company successfully repaid the entirety of its $600 million (US) floating-rate term loan used in the Westinghouse acquisition. Additionally, it received $49 million (US) in its first Westinghouse distribution and $129 million (US) in dividends from JV Inkai. Reflecting its robust financial position and commitment to shareholder value, Cameco increased its annual dividend from $0.12 per share in 2023 to $0.16 in 2024 and proposed a growth plan to double the 2023 dividend to $0.24 per share by 2026.

Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Cameco Corporation (NYSE: CCJ) at the closing market price of USD 41.80, as on April 01, 2025.