Cameco's CCJ third-quarter results yielded little in the way of surprises, and the company maintained its full-year outlook on most segment-level operating estimates. We are affirming our fair value estimate. As has been the case in the previous two quarters, Cameco made sizable spot-market uranium purchases, flipping volume for resale under existing long-term contracts to capture trading profits. Since these sales carry a higher inventory cost than uranium extracted from the company's mines, gross margins were accordingly lower. We're pleased to see the company trade accounting profits for economic profits; its high-grade, low-cost Saskatchewan ore will always be there, but market opportunities may not.Lower average realized uranium prices (down 24% sequentially) also applied pressure to the segment bottom line, although most of the decline was attributable to the fact that this quarter's volume happened to include a larger-than-usual proportion of deliveries made under older contracts that carry lower associated base prices or include price ceilings. Because these older vintage contracts will constitute a proportionately smaller share of deliveries in the coming years, Cameco should benefit from a natural lift in price realizations.
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Analyst Notes
08-12-09 | 3:21PM Cameco Continues Spot Buying in 2Q
05-07-09 | 9:45AM Cameco Reports 1Q
More Analyst Research
Cameco Corporation Full Analyst Report
Analyst Notes
08-12-09 | 3:21PM Cameco Continues Spot Buying in 2Q
05-07-09 | 9:45AM Cameco Reports 1Q
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