Uranium Miners Analyst Watch: September Edition

 |  Includes: CCJ, DNN, UEC, URG, URRE, URZ
by: Itinerant

Editors' Note: This article covers one or more micro-cap stocks. Please be aware of the risks associated with these stocks.

Monitoring analysts and their price targets can provide valuable data points when making investment decisions. We have been keeping an eye on analyst data published on Yahoo.com for some time now, and have been reporting our observations on a monthly basis. This article provides an update for uranium mining companies for the month of September and will compare the data with our August edition. Most companies mentioned in this article have more analysts following their progress than considered in our database. This difference is due to the fact that not all analysts release their predictions to Yahoo.com. Instead, these data are sometimes viewed as proprietary information only available to subscribers of the analysts' services.

Unchanged from previous articles, in this series, we have considered the following companies in alphabetical order for this update: Cameco (NYSE:CCJ), Denison Mines (NYSEMKT:DNN), Uranerz (NYSEMKT:URZ), Uranium Energy (NYSEMKT:UEC), Uranium Resources (NASDAQ:URRE) and Ur-Energy (NYSEMKT:URG).

Our data for these stocks is summarized in the table below. The first three columns list the company name, ticker symbol and share price at the time of writing. Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the number of analysts providing data to Yahoo.com and the mean recommendation given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from Yahoo.com.

The following columns are colored in light green and contain data derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the difference between the share price and the median target price. The column titled "high-low" gives the difference between the high and the low target. The last four columns titled "target change" document the changes in price targets since the August report with the last columns giving the average change over the low, median and high price targets.

Click to enlarge

Note: At present there is only data from one single analyst available on Yahoo.com for Uranium Resources.

Uranerz has just completed a capital raise and we note that the effects of this move may not be considered in all of the published data, yet. We therefore advise caution with regards to interpretation of price targets set for this particular company.

The difference between the current share price and the median price target is listed in column "median-price." Under normal circumstances, we would view a large value in this column as an indicator for the potential of disproportionate gains over the coming year. However, in reference to the comment above, we would suggest that in the case of Uranerz, the large value in this column may also be a matter of analyst price targets not being fully adjusted for the recent capital raise at the present point in time.

Most other considered companies trade around 40% below the median target price (give or take a few % in either direction), with the exception of Uranium energy which seems to be close to fairly priced already in analysts' opinions.

Click to enlarge

Divergence in analyst opinion is measured in column "high-low." The results from this column in the table above are visualized in the next diagram. A high degree of agreement in price targets is observed for Cameco and Uranium Energy with greater divergence for the remaining companies.

Click to enlarge

Price targets have remained almost unchanged during the past month despite a further drop to around $34/lb in the uranium spot price. Price target changes are shown in column "target change average" and the diagram below. On average, price targets have increased by a negligible 0.64%.

Click to enlarge

Unchanged from last month, Uranerz and Ur-Energy are seen most favorably by analysts at present in terms of buy recommendations as documented in column "Recommendation" and the diagram below.

Click to enlarge

Our pick of the month

Until uranium prices pick up again, we believe that an investment in Cameco is the safest bet. The protracted wait for rising prices is sweetened by a dividend yielding around 4% at the present level.

Disclosure: I am long URZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.