Shares of Uranium Energy Corp. (NYSE:UEC) were trading lower after the company Tuesday reported its fiscal third-quarter results.
The company is likely preserving its purchased uranium inventory and waiting for stronger uranium prices, according to HC Wainwright.
The Uranium Energy Analyst: Analyst Heiko Ihle reiterated a Buy rating and price target of $26.75.
The Uranium Energy Thesis: The company recorded no revenue, and its net loss widened to $52.3 million, or $0.11 per share, from a net loss of $30.2 million, or 7 cents per share, in the same quarter in the previous fiscal year, Ihle said in the note.
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Production at Uranium Energy's Christensen Ranch reached 146,550 pounds (lbs) of U3O8 and the company began operations at Burke Hollow.
Management chose to preserve its purchased uranium inventory and not sell it into the spot market during the quarter, possibly waiting for better prices before pursuing spot sales, the analyst stated. "This is easy to do given UEC’s current liquidity position, which provides extensive financial flexibility," he further wrote.
Uranium Energy now has around 1.5 million lbs of U3O8 in its inventory, "which should offer strong margins on future sales based on current spot prices of $86/lb," Ihle said.
He added that he expects the production cost per pound to decline, and any sharp rise in spot prices may prompt uranium sales.
Catalysts: Ihle notes the near-term catalysts as:
- US-sourced uranium is commanding a premium, given ongoing geopolitical risks and the country's share of the world's supply chain.
- Uranium Energy's improved production profile, Christensen Ranch and Burke Hollow in production.
The analyst noted the longer-term catalysts as:
- The ongoing development of the Roughrider Project and Sweetwater Plant
- The company's relationship with the government, which could support future funding opportunities.
UEC Price Action: Uranium Energy shares were down 6.85% at $9.92 at the time of publication on Wednesday, according to Benzinga Pro data.
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