Berenberg hikes Yellow Cake target by 20%

Berenberg has hiked its target price for Yellow Cake by nearly 20%, after the uranium developer raised $125m in a share placing last week.

Yellow Cake announced on 27 September that it was having a capital raise worth $125m through the issue of 18.7m shares at 550p per share – a move that Berenberg said was "taking advantage of an attractive market".

"The proceeds will be used to acquire c1.5mlb of physical uranium (U3O8) from Kazatomprom as part of its $100m annual option to acquire physical uranium at the c12% in-the-money price of USD65.50/lb," Berenberg explained.

The funds will also be put towards working capital and general corporate costs, and to "potentially fund opportunistic additional purchases of uranium", according to the company.

"This allows Yellow Cake to further capitalise on tight spot volumes, which can keep prices elevated," Berenberg said.

The broker raised its target price from 550p to 658p and reiterated a 'buy' rating on the stock, which was down 2% at 541.5p by 1040 BST on Tuesday.