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Investing.com - RBC Capital initiated coverage on Yellow (OTC:YELLQ) Cake Plc. (LSE:YCA) (OTC:YLLXF) with an Outperform rating and a price target of GBP6.20, citing strong uranium demand outlook.
The London-listed company provides low-risk uranium exposure and is currently trading at a 10% discount to spot net asset value (NAV), according to RBC Capital.
RBC Capital estimates that by 2040, the industry will need 50% more uranium, and prices above $100 per pound will be required to incentivize sufficient supply compared to the current spot price of $72.2 per pound.
The investment bank notes that Yellow Cake can act as a catalyst to further tighten the uranium market by purchasing additional material.
RBC Capital’s 12-month price target of 620 pence is based on 1.0x NAV, assuming uranium prices increase to $80 per pound from current levels.
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