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Investing.com - JPMorgan initiated coverage on Centrus Energy Corp. (NYSE:LEU) with a neutral rating and a $148.00 price target on Thursday. The stock, which has delivered an impressive 172% return year-to-date and currently trades near $181, appears overvalued according to InvestingPro Fair Value metrics.
The firm highlighted Centrus as the only publicly-traded, US domestic-headquartered enriched uranium broker-trader and emerging producer, offering investors exposure to US energy independence and national security through its position in the nuclear value chain. With revenue of $471.4 million in the last twelve months and a healthy current ratio of 2.12, the company maintains a strong financial position.
JPMorgan noted that Centrus operates two business segments: Low-Enriched Uranium, which supplies nuclear fuel components to commercial customers through trading, and Technical Solutions, which provides advanced uranium enrichment technology to the US government with plans for commercial-scale domestic enrichment expansion.
The investment bank expects Centrus’s growing backlog and improved balance sheet to provide flexibility for future growth opportunities, while acknowledging the company will need significant government funding to support its in-house enrichment efforts.
Despite believing LEU should trade at a premium given its national security exposure, limited substitutes in a supply-constrained market, and long-term organic growth opportunities, JPMorgan recommended waiting for a better entry point following a period of strong performance in the sector. For deeper insights into Centrus Energy’s valuation and 16 additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Centrus Energy Corp. has announced the delivery of 900 kilograms of High-Assay, Low-Enriched Uranium (HALEU) to the U.S. Department of Energy, meeting the Phase II contract target. The company has now delivered over 920 kilograms of HALEU under this contract and will move to Phase III, with a contract extension through June 30, 2026. This extension, valued at approximately $110 million, allows Centrus to continue production at its American Centrifuge Plant in Piketon, Ohio. The Department of Energy retains options for further extensions, potentially extending the contract by up to eight additional years. Evercore ISI has raised its price target for Centrus Energy from $145 to $205, maintaining an Outperform rating. The firm cites Centrus’s agreement with TerraPower and its role in advanced nuclear reactor technology as key factors. The firm also highlights Centrus’s unique position as the only company with a Nuclear Regulatory Commission license for HALEU production. These developments underscore Centrus’s strategic importance in national energy policy and its potential for future growth.
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