Cameco upgraded on economy and Kazakhstan arrests

June 10, 2009. National Post

by Jonathan Ratner

Cameco Corp. was upgraded from “hold” to “buy” with a price target hike from US$28.40 per share to $42.60 at Desjardins Securities on Wednesday due to optimism about the uranium market.

The firm said this is a result of its increased confidence in the recovery of the global economy, which is underpinned by China’s plans to develop more nuclear power plants. It also cited potential production problems in Kazakhstan due to political turmoil.

“The improvement of credit markets across the world should result in nuclear power plants being able to fully finance annual uranium purchases,” analyst John Redstone told clients.

He expects the uranium market will remain tights and noted the recent arrest of several senior managers at Kazatomprom, a state-owned nuclear holding company in Kazakhstan, suggests mines there will find it difficult to meet forecasts.