Yellow Cake Gets ‘Outperform’ Rating from RBC on Rising Uranium Demand

RBC Capital initiated coverage of uranium firm Yellow Cake (LON: YCA) with an Outperform rating and a 620p price target in a note this week, citing structural supply constraints and growing nuclear energy demand as key drivers.

The firm told investors that uranium demand has entered a new phase, underpinned by the global need for low-carbon, baseload electricity. 

RBC Capital estimates the market will require 50% more uranium by 2040, and prices above $100 per pound to encourage sufficient supply growth.

Uranium demand has inflected, analysts at RBC Capital said in their initiation note. The bank believes Yellow Cake is well-positioned to benefit from this new pricing environment.

Yellow Cake, which acquires and holds physical uranium, is “the only London-listed equity that provides low-risk uranium exposure,” the analysts said. 

RBC added that the company could tighten the uranium market even further by increasing its material purchases.

Shares in Yellow Cake have declined 1% so far this year. However, in the last three months, it has rallied over 20% and currently trades around the 490p mark.

“It is trading at a 10% discount to spot NAV,” stated RBC. “Our 12-month PT is 620p (1.0x NAV) assuming uranium prices lift to $80/lb.”