Centrus Energy (LEU) is up more than 60% in the year to date, and with short interest of 21.15%, it is a short squeeze candidate. In the event of a breakdown of resistance points, analysts forecast a potential gain of around 35%.
At the end of trading in January 2025, short interest in LEU was at 21.16%, with 3.26 million shares being sold short. The percentage is not high, but high enough to support a squeeze in case of increased buying pressure, according to MarketBeat. And this configuration is materializing as institutional holdings continue to build.
Despite the short squeeze narrative, Centrus also faces serious regulatory issues. The United States has banned Russian uranium imports, which is concerning for LEU stock because Centrus sources a percentage of its low-enriched uranium (LEU) from Russia.
Centrus is also in the process of ramping up centrifuge manufacturing, reducing its reliance on third-party providers. The expansion is capital-intensive, though, raising concern over the company’s financial flexibility. The company issued $402 million of debt in a recent action to strengthen its balance sheet, providing liquidity for strategic initiatives. Any further expansion will need additional funding, creating potential for dilution.
Another challenge is Centrus’ revenue outlook. With a large multi-year orderbook that runs to 2040, analysts predict that revenue is set to be flat until 2026. Higher prices for uranium will inflate input costs, and continued expansion could be a drain on profitability in the short term.
About Centrus Energy Stock
Centrus Energy is a key player in the U.S. nuclear fuel supply chain, specializing in high-assay low-enriched uranium (HALEU), a next-generation reactor fuel of strategic importance. Based in Bethesda, Maryland, Centrus has positioned itself as a leading supplier of HALEU to support the United States’ expanding nuclear energy infrastructure. Centrus is the only licensed provider of HALEU in the U.S.
LEU stock has been extremely volatile, having ranged between a low of $33.51 and a high of $122.94 over a period of 52 weeks. The stock is currently trading around $106 after investors bet that demand for HALEU fuel would continue to surge. Centrus’ valuation is in question, however, with a price-earnings ratio of 27x and a mean price target of $116, in line with the current price. Shares are up 67% in the year-to-date, vastly outperforming the 4% gain in the S&P 500 Index ($SPX).
Centrus Energy’s price-sales ratio of 4.4x suggests a premium valuation likely driven by strong investor interest for the production of next-generation nuclear fuels and government-supported nuclear projects.
Centrus Energy Stock Beat on Earnings
Centrus Energy issued Q4 2024 profits that surpassed expectations, reporting earnings of $3.20 per share, significantly exceeding Wall Street predictions of $1.06. This shows the company’s success in leveraging excellent market demand coupled with government-backed nuclear power projects.
Management highlighted its expanding backlog of contracts from the government and rising momentum around nuclear energy as significant tailwinds. Supply chain risk and rising input costs were identified by the firm, particularly under uncertainty around Russian imports of uranium.
Looking ahead, management has guided for Q1 2025 conservatively, with analysts forecasting EPS of $0.02, down considerably from Q4. The highest prediction here is $0.05, while the lowest prediction is -$0.02, showing possible volatility. For fiscal year 2025, the expected EPS comes out at $2.63, down by 41.16% from FY 2024’s $4.47, showing possible setbacks due to increased spending and uncertainty regarding the regulatory environment.
Despite these concerns, Centrus’ Q4 performance and $3.7 billion backlog underpin the longer-term vision, but investors must monitor potential headwinds that could impact its near-term profitability.
Centrus Energy won signed massive contracts from the government and accelerated its plans to enhance its presence in the nuclear power field. A prominent contract includes a $2.7 billion deal with the United States Department of Energy (DoE) aimed at enhancing local HALEU production — a crucial source of power for next-generation reactors.
What Do Analysts Expect for Centrus Energy Stock?
Centrus Energy has three covering analysts, giving it a “Moderate Buy” consensus rating. Two analysts have issued “Strong Buy” recommendations, while one has issued a “Hold” rating. This points toward an optimistic but cautious prognosis for the company.
The mean price target for LEU stock is $116.33, indicating a relatively minor premium of just 2.05% over its recent closing price of $113.99. The highest price target is $154, representing possible upside of 35%, while the lowest price target is $61, representing possible downside of 46%. The huge range indicates uncertainty regarding Centrus’ worth, as analysts weigh attractive opportunities for growth against threats posed by regulation and volatile profits.
