Jefferies Financial Group Inc. initiates coverage of nuclear energy stocks: Cameco (CCJ.US) and BWX Technologies (BWXT.US) rated Buy, as nuclear energy enters its strongest demand cycle in 40 years.

Jefferies Financial Group Inc. has assigned its first "Buy" ratings to two nuclear stocks, Cameco (CCJ.US) and BWX Technologies (BWXT.US), with target prices of $138 and $181 respectively, believing that the global nuclear industry is entering its strongest demand cycle in forty years. Laurence Alexander, an analyst at Jefferies Financial Group Inc., stated that Cameco is one of the largest uranium fuel suppliers in the world, and its vertical integration utilizing low-cost mines and nuclear reactor designs positions it to obtain higher contract prices for deliveries extending to 2040. Alexander wrote that the company is "a major beneficiary of Western nuclear construction," as over 30 countries have committed to tripling their nuclear power capacity by 2050. As electricity demand accelerates, super-scale data centers are taking on the base load for artificial intelligence, while the exclusion of Russia has also spurred incentives for nuclear conversion and enrichment. Using a sum-of-the-parts valuation, the analyst estimates that Cameco's upstream asset value will reach $63 per share by the end of 2027, with conversion asset value at $11 per share, undeveloped resources and corporate assets valued at $7 per share, and the long-term partnership value with the U.S. government regarding Westinghouse estimated at $51 per share. Alexander expressed a preference for BWX Technologies, noting that the company has operational leverage in maintaining and expanding commercial nuclear power plants, and its unique position as the sole supplier of nuclear reactors and fuel for the U.S. Navy allows it to avoid direct profit and loss volatility from fluctuations in uranium or enrichment prices. Given the strong nuclear cycle, the analyst expects BWX Technologies to achieve a sales growth of 6%-7% and earnings per share growth of 13%-17% by 2030, and it is likely to maintain this growth momentum through 2040 barring any policy shocks. Alexander also initiated "Buy" ratings for Denison Mines (DNN.US), enCore Energy (EU.US), Mirion Technologies (MIR.US), NexGen Energy (NXE.US), and Solstice Advance Materials (SOLS.US), while rating Centrus Energy (LEU.US) and Uranium Energy (UEC.US) as "Hold."