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Uranium company Energy Fuels rises as target price raised by Roth on strength of balance sheet

Shares of Energy Fuels rallied in Wednesday's New York and Canadian trading
The chemical symbol for uranium
The uranium company successfully pushed for a Commerce Department probe of imports

Energy Fuels Inc (NYSEAMERICAN:UUUU) (TSE:EFR) rallied Wednesday after Roth Capital Partners raised its target price and reiterated a Buy rating.

The firm lifted its 12-month target price for the Lakewood, Colorado, uranium company to US$4 from US$3.75, saying it maintained a stronger balance sheet than Roth had estimated.

Shares of Energy Fuels rose 11% to US$2.95 in Wednesday's New York trading. They were up 9.8% to C$3.91 in Canada.

READ: Uranium company Energy Fuels ends 2018 with US$52M of working capital

In response to a petition submitted by Energy Fuels and Ur-Energy Inc (NYSEAMERICAN:URG) (TSE:URE) in January 2018, the US Commerce Department began an investigation under Section 232 of the Trade Expansion Act into the effects of uranium imports on national security.

The companies are seeking remedies including a quota to limit imports of uranium into the US, effectively reserving 25% of the market for US uranium production. They are also seeking a requirement for federal utilities and agencies to buy US uranium.

“We anticipate a resolution to the Section 232 petition by mid-July of this year and believe that a positive outcome for the uranium industry is likely,” Roth analyst Joe Reagor wrote in a research paper. “We note that management's guidance does not appear to include an expectation one way or the other, but we believe a positive outcome could result in an increase in production and sales guidance.”

'Pull forward'

The outlook for Energy Fuels remains positive, according to Roth.

The firm added that it was increasing its price target because of the “pull forward” of its discounted cash flow (DCF) model and Roth’s revised estimates.

While the firm’s estimates do not reflect the impact of the Section 232 petition, Reagor wrote that the Roth is confident there will be a positive resolution.

–This story has been updated to give the latest share prices–

Contact Dennis Fitzgerald at [email protected]

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