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On Tuesday, Citi initiated coverage on Centrus Energy Corp. (NYSE:LEU) with a Neutral rating and a price target of $104.00, joining a wider range of analyst targets spanning from $61 to $300. The stock has demonstrated remarkable strength with a 103% return over the past year. According to InvestingPro data, the company maintains strong financial health with a current ratio of 2.93. The research firm’s analyst cited the company’s potential for transformative change as it stands on the brink of becoming the sole large-scale commercial producer of Low Enriched Uranium (LEU) and High-Assay Low Enriched Uranium (HALEU) in the United States, with plans to expand its enrichment capacity to 3.5 million Separative Work Units (SWU). This expansion comes amid impressive revenue growth of 38% in the last twelve months, as reported by InvestingPro.
The analyst noted that Centrus’s Ohio facility has met key goals and is now at a juncture where it requires additional funding to proceed with its expansion. The U.S. government’s $3.4 billion funding is expected to be distributed to one or possibly two companies, considering that a minimum economically viable facility would need a capital expenditure of approximately $2 to $2.5 billion.
If Centrus secures the necessary funding, the construction of each additional cascade for uranium enrichment could contribute roughly $1.3 per share in Net Present Value (NPV), which the analyst suggests is currently reflected in the stock price with about 57 cascades.
Despite the company’s promising position in the nuclear and artificial intelligence sector and its operational successes, the analyst pointed out that there are still uncertainties regarding valuation and funding. These factors have led to the decision to begin with a Neutral rating and a $104 price target for Centrus Energy stock. InvestingPro analysis reveals several additional factors affecting valuation, with 8 more exclusive ProTips available to subscribers.
In other recent news, Centrus Energy reported a notable 40% increase in revenue for Q4 2024, reaching $442 million. This growth was largely driven by its Low Enriched Uranium (LEU) segment, which saw a significant rise in revenue. Despite a decline in net income from $84.4 million in 2023 to $73.2 million, the company maintained its gross profit at $111.5 million. Centrus Energy also secured multiple contracts and investments in uranium enrichment, strengthening its competitive position in the market. Additionally, the company issued $402.5 million in convertible senior notes, bolstering its capital position for future strategic initiatives. The firm is focusing on expanding its uranium enrichment capabilities and preparing for potential task orders from the Department of Energy. Analysts at Lake Street Capital have noted the company’s strategic advancements and the potential for future growth. These developments reflect Centrus Energy’s ongoing efforts to enhance its market presence and operational capabilities.
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