Bullish signals emerge for uranium prices: BofA By Investing.com

Investing.com — Bullish signals for prices are emerging as a result of several market dynamics and geopolitical factors, according to analysts at BofA Securities.

Recent uncertainty over the availability of enriched uranium of Russian origin, along with concerns about a potential export ban by Russia in response to US sanctions, has highlighted the critical issue of security of supply in the uranium market.

Despite a weaker-than-expected market in 2024, with lower activity from US fuel buyers due to geopolitical tensions and a temporary increase in supply from Kazakhstan, these factors are expected to drive uranium prices higher on short term.

BofA Securities maintains a bullish outlook on uranium, forecasting persistent market shortages through 2027.

Although they adjusted their short-term price forecasts downward for 2024, marking third-quarter prices at $81.63 per pound and cutting their full-year forecast to $89.10 per pound (a 13% discount ), they predict a strong recovery in the medium term.

The revised forecast for 2025 has been cut only modestly to $115 per pound, while the peak price forecast for 2026 remains unchanged at $135 per pound, an increase from current spot prices.

Several factors contribute to this optimistic outlook. One of the key factors is the increasing reliance on nuclear power as a low-carbon energy source, particularly as tech giants like Microsoft (NASDAQ: ) sign contracts for nuclear power to meet their needs in power surge in data centers.

This trend not only underscores uranium’s vital role in the global energy transition, but also reinforces investor sentiment for uranium stocks, which have seen renewed interest recently due to positive developments in the nuclear power sector.

The anticipated restart of nuclear facilities, such as the Three Mile Island Unit 1 in the United States, along with continued supply-side challenges, including pressures on Kazakhstan’s production and the possible curtailment of Russian exports, further support the case for higher uranium prices.

With a supply shortage projected to continue for the next several years, BofA Securities suggests that uranium markets are poised for a recovery.

As Cameco (NYSE: ), a major player in the uranium space, benefits from these favorable market conditions, BofA raised its price objective on the company’s stock from $60.50 to $63, signaling the company’s strengthening fundamentals. uranium producers. The combination of these supply constraints, increased demand for nuclear power and geopolitical risks creates a bullish picture for uranium prices going forward.