'World's only public enriched nuclear fuel company' Centrus jumps on BoA initiation

BoA has initiated coverage on Centrus Energy, a smaller company that supplies nuclear fuel for use in reactors, with a «buy» recommendation at a target price implying 13% upside to current quotes – and that is after a 7% gain yesterday, June 4, when the stock hit a decade-long high. Shares have continued to rise during premarket trading today.

BoA analyst Lawson Winder, who will cover Centrus Energy, has initiated with a «buy» and a $160 per share target price, as reported Seeking Alpha. That is still 13% higher than the market price after yesterday's rally.

Centrus Energy, Winder points out, is «the world's only publicly-traded enriched nuclear fuel company at a time when the industry is poised for growth.»

Centrus Energy's share price jumped more than 7% yesterday to $141, the highest close since the company's restructuring in 2014. This morning, the stock extended the gains, up almost 3.5% at the time of this writing.

Centrus Energy supplies low-enriched uranium nuclear fuel (LEU) and, as Winder notes, plans to build its own productive LEU capacity. The latter is scheduled to be operational by 2029, with a decade-long expansion after. 

Centrus benefits from significant barriers to entry in its industry: The company is one of only two licensed producers of enriched uranium in the U.S. and the only one with a license for national security applications, Winder pointed out. He is optimistic about the outlook for global demand for nuclear fuel, seeing the focus of the Trump administration on nuclear power as a driver for the U.S. market.

The BofA report also drew attention to Centrus Energy's strong financial position. As of March 31, it had $653 million in cash, the company reported. At the time, it wrote that it had more than $3.4 billion in U.S. Congressional appropriations to support domestic nuclear fuel production.

Centrus Energy shares have a total of eight «buy» ratings from Wall Street analysts versus two «holds,» according to MarketWatch. Meanwhile, the average target price of $145.02 is only 3% above yesterday's closing price. 

Meta Platforms, the owner of Facebook and Instagram and one of the largest players in AI, announced on Tuesday its largest power deal to date, with Constellation Energy, a U.S. operator of nuclear power plants. This will allow Meta to fulfill its commitment to cover 100% of its electricity consumption with clean energy.

«Nuclear energy, once a pariah left for dead, is enjoying a rebirth, bolstered by AI’s voracious need for energy and the growing acknowledgment that additional sources of energy will be needed to balance out the intermittency of solar and wind power,» said Yardeni Research founder Ed Yardeni, as quoted in a Forbes piece.

The Meta deal spurred gains in stocks across the whole nuclear industry. Indeed, it could become a major growth driver for the entire energy sector, says Paul Bell, a senior equity trader at Mizuho. MarketWatch compiled a list of 10 nuclear stocks «expected to rise as much as 94% after the Meta-Constellation deal.»