ENCUF - enCore Energy Corp. (ENCUF)(EU:CA) - Price Objective Raised. 2022 Estimates Initiated

We are raising our price objective on the shares of ENCUF to $1.50 from $1.00. The increase reflects continued optimism in a rise in uranium prices, a slight increase in uranium spot pricing in recent weeks, and our introduction of 2022 estimates. We continue to believe uranium prices will soon break out as a confluence of rising demand and decreasing supply will force buyers to begin to sign long-term contracts at higher prices. In recent weeks, spot uranium prices have risen above $30/lb. after a slump in late April. And while past upward movements have proven to be mere head fakes, we believe an eventual breakthrough above $40/lb. is coming within the next 12-18 months.We are providing initial 2022 annual estimates. We expect the company to report C$9.1 million in revenues with the startup of the Rosalita plant in 2022. We expect EBITDA and EPS to be negative (C$2.5 million and C$0.02 respectively) in response to startup costs and limited production. Our models assume realized uranium prices of $35/lb. in 2022 reflecting a blend of contracted and spot price sales. Contracted prices typically run 25-30% above spot. We see the signing of a long-term contract at prices near $40/lb. and the startup of the Rosalita plant as the next major milestones for enCore.While we believe in the upward direction of uranium prices and enCore shares, we will not chase the stock without consideration of the stocks price. The shares of ENCUF have been strong since the acquisition of property from Westwater Resources under the belief that Chairman Bill Sheriff will be able to repeat his past success in aggregating uranium assets ahead of a boom in uranium prices. While we support that belief, we will not do so regardless of the stock's price. We look for a breakout in uranium prices or more concrete developments in the company's movement towards uranium mining or processing in order to further raise our price objective. Read More >>