TD Newcrest Analyst: Cameco Meets Earnings Target, Face Production Issues

With third quarter earnings of C$0.41 a share, Cameco Corp. (CCJ) delivered results that were largely in line with the consensus analyst forecasts. But TD Newcrest analyst Greg Barnes is not impressed. He noted that the company faced production issues at "all" of its uranium operations, and that those problems were masked by better-than-expected results from the Bruce Power facility in Ontario.

He wrote in a note to clients:

The uranium operations were a clear disappointment - the realized price was below our expectations and costs were higher than expected. This was in part offset by higher-than-expected sales volumes.

Cameco produced 2.7 million pounds of uranium in the quarter, which is way below Mr. Barnes' forecast of 4.3 million. And the company's average realized selling price was $37.88 a pound, which was also below the $39.56 he anticipated.

He was particularly surprised by the weak production numbers from Rabbit Lake, which was affected by planned maintenance and project work.

He wrote:

We would note that in its [second quarter] results, Cameco stated that work was not expected to affect the timing of future production.