Citi recently initiated coverage on Yellow Cake Plc (YCA:LN) (OTC: YLLXF) stock, a company that provides investors with exposure to physical uranium, giving it a Buy rating and a price target of £7.50. Citi pointed out that Yellow Cake has doubled its uranium holdings since 2019 and expects a further 50% increase over the next five years.
The firm highlighted Yellow Cake’s appeal due to its low operating costs and potential for volume growth. The positive outlook for uranium prices is supported by the expanding nuclear energy sector, with supply failing to keep pace with rising demand. Citi’s house view predicts that uranium prices will reach $110 per pound by 2025/26.
Citi views Yellow Cake as a unique investment opportunity for investors, akin to an exchange-traded fund (ETF), enabling them to invest in physical uranium. The firm’s optimism about the company is based on the anticipated growth in the uranium market, driven by the nuclear energy theme.
Although Citi prefers exposure to uranium through the pure-play upstream miner Kazatomprom (LON:), citing the potential for higher earnings and benefits from positive operating leverage, it still sees Yellow Cake as a reliable option for investors seeking exposure to the uranium sector.
Citi’s decision to initiate coverage with a Buy rating and a £7.50 price target reflects confidence in Yellow Cake’s business model and its ability to capitalize on the favorable dynamics in the uranium market.
This text was generated with the assistance of AI and reviewed by an editor. For additional information, please refer to our Terms & Conditions.