Devalued Kazakh Currency Boosts Uranium One's Margins

On Wednesday, the Kazakh government changed its policy and now supports its currency at around 150 Tenge to the U.S. dollar, which represents a valuer reduction of about 20% from the governments previous FX support at 120 Tenge.

RBC Capital analyst Adam Schatzker increased his Uranium One price target from $3 to $3.50, on his estimate that the devalued Tenge will reduce operating costs by 12.5%. The analyst maintained his "buy" rating on the stock.

This change directly affects Uranium One's Kazakh operations given that 80% of its operating costs are Tenge-based," he said in a note to clients.

"We have modified our model to account for the currency devaluation and, as expected, the company's profit margin increases since its revenues are U.S. Dollar-based."

Shares in Uranium One have climbed 13% so far this week, with the bulk of the increase coming yesterday, following the Kazazh currency change.