Bullish Signals for Uranium Prices Emerge: BofA

Analysts at BofA Securities are indicating bullish trends for uranium prices, driven by several market dynamics and geopolitical issues.

Currently, uncertainty regarding the availability of enriched uranium from Russia, along with fears of a potential export ban from Russia in response to U.S. sanctions, is highlighting the critical need for supply security in the uranium market.

Although the uranium market is expected to be softer in 2024—largely due to reduced activity from U.S. fuel buyers triggered by geopolitical tensions and a temporary supply increase from Kazakhstan—these factors are likely to push uranium prices higher in the short term.

BofA Securities holds a positive outlook for uranium, predicting ongoing market deficits until 2027. While they have adjusted their near-term price forecasts downward for 2024, with third-quarter prices now expected at approximately $81.63 per pound and a revised full-year forecast of about $89.10 per pound (a 13% decrease), they anticipate a significant recovery in the medium term.

The forecast for 2025 was only slightly lowered to $115 per pound, while the peak price estimate for 2026 remains steady at $135 per pound, indicating a rise from current spot prices.

Several factors contribute to this optimistic perspective. One major driver is the growing reliance on nuclear power as a low-carbon energy source, especially as large corporations increasingly secure contracts for nuclear energy to support their expanding data center needs.

This trend signals the crucial role of uranium in the global energy transition and bolsters investor interest in uranium-related equities, which have recently gained attention due to positive developments in the nuclear energy sector.

The expected restart of nuclear facilities, like the Three Mile Island Unit 1 in the U.S., coupled with ongoing supply-side challenges such as production pressures in Kazakhstan and potential restrictions on Russian exports, further strengthens the argument for rising uranium prices.

With a projected supply deficit expected to persist over the coming years, BofA Securities believes the uranium market is poised for a resurgence.

As Cameco, a key player in the uranium industry, stands to benefit from these favorable market conditions, BofA has raised its price target for the company’s shares from $60.50 to $63, reflecting the improving fundamentals among uranium producers. The combination of supply constraints, increasing demand for nuclear energy, and geopolitical risks presents a bullish outlook for uranium prices in the future.