Cameco Corp. Monday lowered its annual production forecast and reported third-quarter financial results below expectations, sending its shares down more than 6 per cent. But several analysts still suggest the uranium maker could provide some significant fuel to portfolio returns over the next year.
Citing unfavourable market conditions, Cameco reported earnings per share of 27 cents, missing the consensus of 32 cents. Its production of uranium to fuel nuclear power plants fell 5 per cent to 5.3 million pounds in the quarter. For the year, it is expected to drop 1 per cent to 21.7 million pounds.
CIBC World Markets Inc. analyst Ian Parkinson trimmed his price target slightly, by $1 to $42. But that's still more than double the current trading price.
"We believe the uranium market will continue to look for direction in the near term as inventories built up since Fukushima are delivered into the market," he said, referring to the Japanese nuclear shutdowns resulting from the tsunami disaster. "Cameco's pullback due to revised production guidance should be looked at as an opportunity to purchase a best-in-class asset."
Desjardins Securities Inc. analyst John Hughes cut his price target to $38.40 a share from $46 and reiterated his "buy" recommendation.
Mr. Hughes is feeling less bullish on the uranium market itself, lowering his 2012 average price for the commodity to $65 (U.S.) per pound from $80. He cited several factors, including macroeconomic issues and slower nuclear reactor restarts in Japan.
However, even with tempering his demand forecast, he expects a market supply deficit of 209,000 tonnes next year.
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Molybdenum isn't exactly a word that rolls off the tongue, nor is it often the focus of contentious debates about the direction of the global economy.
But sluggish economic conditions also spell bad news for the mineral that is used to toughen alloys and is a critical component of many construction projects. Desjardins Securities Inc. analyst John Hughes today took a knife to his forecasts for the metal for next year, expecting prices now to average $20 (U.S.) per pound instead of $30.
That action had a domino effect, prompting him to downgrade Thompson Creek Metals Co. Inc. , one of the world's largest producers. He now rates it as a simple "buy" rather than a coveted "top pick."
"Large-scale restarts of molybdenum-containing stainless steel remain elusive during the current period of macroeconomic uncertainty. Hence, large-scale projects requiring the use of molybdenum, such as desalination plants and pipeline construction projects, are being deferred. We are factoring in a slower demand recovery than originally anticipated and reducing our pricing forecast accordingly," Mr. Hughes wrote in a research note.
It's worth noting that his average price forecast for next year is still well above the current price of about $13.25.
Downside: Mr. Hughes cut his price target on Thompson Creek by $5 (Canadian) to $16.
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Richmont Mines Inc. is continuing to report strong financial results, with its third-quarter profit more than doubling from a year ago. CIBC World Markets Inc. analyst Cosmos Chiu praised the gold producer for generating superior financial results to peers, "a trend we believe will continue."
Upside: Mr. Chiu raised his price target by $2 to $16, commenting the company is still his favourite stock for exposure to small-cap Canadian producers.
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Coeur d'Alene Mines Corp. reported "blowout" earnings of 79 cents (U.S.) per share in its latest quarter, 10 cents above consensus forecasts, thanks largely to selling a portion of its silver inventories. CIBC World Markets Inc. analyst Brian Quast said he's encouraged by Coeur d'Alene's concrete plans to fix operational issues at its Kensington gold mine in Alaska and thinks the company may buy back shares next year.
Upside: Mr. Quast raised his price target by $5 to $36 and maintained a "sector performer" rating.
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Beacon Securities Ltd. analyst Michael Mills has bolstered his profitability outlook for Foraco International SA , after the contract driller reported 59 per cent higher revenues in the third quarter and "very impressive" earnings growth. Its mineral drilling division saw robust growth amid all geographic regions, and the company expects to see continued strong bidding demand for its services.
Upside: Mr. Mills raised his price target by 50 cents to $5.25 and reiterated a "buy" rating.
Darcy Keith