Cameco Upgraded To Buy At BofA, Cites 'Limited Downside In Bad Macro'

In a report published Monday, analysts at Bank of America Merrill Lynch have upgraded

from Neutral to Buy. The price target has been raised from C$20 to C$23. The company's cost structure has been positively impacted in the medium and longer term by the weaker Canadian dollar versus the U.S. dollar. "CCO has a strong portfolio of long term contracts committed through 2018, which resulted in realized U3O8 prices 15% to 30% above depressed spot prices (now at $39/lb) since the Fukushima accident (1Q11)… believe CCO's strong long term contract portfolio will allow it to be patient when negotiating new contracts after uncovered requirements at utilities begin to rise (2018)," the analysts said. The analysts believe that the long-term outlook for uranium remains positive despite the significant uncertainty the uranium markets are facing in the near term. "We forecast rising 2015-20 U3O8 demand underpinned by China's 29 reactors under construction, with a potential 30 more by 2023, as the country's urbanization raises electricity demand and the need to curb CO2 emissions," the analysts added.