Dahlman Rose Gives Color On Cameco Corp. Following Solid Earnings

Cameco Corp. CCJ reported adjusted 4Q10 EPS of $0.48 exceeding Dahlman Rose's estimate and the consensus estimates. The results highlight the earnings power that the company exhibits toward increasing uranium prices. Dahlman reiterates its Buy rating on CCJ and maintains its $52 PT. Results compared with Dahlman's estimate of $0.33 and the consensus estimate $0.28. Results compare with EPS of $0.63 and $0.20 in the previous quarter and year ago period, respectively. Variance from our estimate can be attributed to a higher than anticipated uranium price realization during the quarter. Dahlman had expected a price realization of approximately C$45 per pound while the actual uranium price realization was $50.10 per pound. Management estimates that there are 65 reactors currently under construction and that there should be at least 546 reactors operating by 2020. Dahlman estimates that this would take uranium demand to approximately 220 million pounds on an annual basis. With secondary sources of uranium likely decreasing over the coming decade and demand increasing by approximately 40 million pounds, Dahlman anticipates that the price for the metal should be well supported and will likely trend somewhat higher. CCJ is trading higher at $44.10