Guggenheim initiates coverage of Centrus Energy with Buy rating, $167 price target

Centrus Energy (LEU) stock rose 0.04% to $147.20 in pre-market trading after Guggenheim initiated coverage with a Buy rating and $167 price target. The company has seen a 60% decline over the past year but has institutional interest and a HALEU supply contract with Antares Nuclear.

Centrus Energy Corp. (LEU) stock rose 9.34% after securing two multi-year HALEU deals with Radiant and Antares Nuclear, which include prepayments. The company reported quarterly revenue of $176.1M and net income of $16.8M. LEU's P/E ratio is 72, and it carries significant debt but maintains a liquid balance sheet. The stock's recent surge is driven by long-term contracts and expansion plans, despite a $500M securities offering that caused short-term dilution.

The U.S. Department of Energy granted Vistra Corp (NYSE:VST) a $4.2 billion loan for nuclear plant upgrades, boosting nuclear stocks. Vistra's shares rose 11%, and Centrus Energy (NYSE:LEU) gained 11.3%. The loan aims to extend plant life and add 433 MW capacity. Centrus, a nuclear fuel supplier, may not directly benefit as Vistra is not a confirmed customer.

Google (Alphabet) and Constellation Energy agreed to add 890 MW of nuclear capacity from 11 U.S. plants. Constellation's shares rose 15%, while Vistra, Talen Energy, and Centrus Energy also gained. The deal aims to meet rising data center demand in the PJM grid. Analysts see benefits for nuclear power producers and uranium enrichers.

Centrus Energy (NYSE:LEU) supplies enriched uranium fuel for nuclear reactors, including those developed by Oklo (NYSE:OKLO) and NuScale. It recently announced a joint venture with Oklo. Centrus reported Q2 revenue of $176.1M, up 14% YoY, and net income of $16.8M. The company has a $4.5B backlog through 2040, including a $900M deal with the U.S. Department of Energy.

DOE officials urged Centrus Energy, General Matter, and Orano to speed up uranium enrichment projects. The US banned Russian uranium imports in 2022, with waivers expiring in 2028. The DOE awarded $900 million each to these companies to boost domestic enrichment capacity. Centrus and General Matter have signed supply contracts with advanced reactor developers.