Cameco Corp. Shares Continue to Fall

Cameco Corp. (CCJ) shares were down another 2% Wednesday, falling further below its net asset value. The stock traded at C$22.60 as of 1 p.m. ET on Wednesday, and Cameco shares have fallen in half since hitting C$44.38 on June 30.

Desjardins Securities analyst John Redstone said the decline has a lot to do with the market's diminishing confidence that uranium prices will not increase significantly any time soon. 

In a note to clients, Mr. Redstone said:

Previous valuations accorded by the market used earnings with a high multiple based on the anticipation of a sharp increase in the price of uranium.  Since then, however, the price has dropped considerably to $53, from a high of $146. It is highly debatable whether such high multiples will be applied anymore.

Mr. Redstone said he still believes Cameco stock can rise to its net asset value, adjusting his price target from C$34.20 to C$29.55. Reflecting the current share price, he also upgraded his recommendation from "hold" to "buy."

Comments

[Steven Ward:]

There are two drags here, uranium and the Fort Hills project which leaves CCJ in the lousy position of a lower price for her money making commodity and a lousy return on a future commodity that has yet to earn a penny.
CCJ is a falling knife. Not only should you wait and see where the bottom is, but you can afford to wait to see if and when it starts to move up and that isn't now.

2008 Oct 02 08:59 AM

[M33:]

CAMECO is in a unique position when it comes to spot uranium prices, we need to remember the price spike was triggered by Cigar lake floodings.

2008 Oct 03 10:25 PM