Cameco Corporation "Revisiting Westinghouse's growth & outlook" (Neutral) Eadie

Research evidence excerpt

Cameco Corporation "Revisiting Westinghouse's growth & outlook" (Neutral) Eadie

nearly half the world's current nuclear power stations.

Technology Upside: Longer-term optionality from next-gen platforms (AP300 SMR

and eVinci microreactor), positioning Westinghouse as a leader in emerging

nuclear applications beyond the core. In our view, the market does not ascribe any

value to these ventures for Westinghouse.

The bear case is principally execution and delivery risks alongside potential structural

constraints which drive earnings and market share disappointments given lofty base

expectations.

Execution:

Cost and delivery risk: Large-scale nuclear builds remain structurally prone to

cost overruns and multi-year delays (e.g. Vogtle & Flamanville), which can

erode utility and political confidence and slow future orders. We have already

seen AP1000 cost estimates increase from $6-8bn to $9-13bn within the last

year.

Constructor dependency: Reliance on third-party EPCs (e.g. Bechtel) limits

control over execution and drives higher all-in project costs, reducing

competitiveness vs alternative energy sources as AP1000 cost estimates rise.

The high regulatory requirements associated with labor/work compounds this;

we have spoken to various industry experts, including the former COO of

Westinghouse (see note) that raises labor and field construction workers as a

key headwind to moving fast. Earnings are inherently “lumpy” due to

milestone-driven new builds, while scaling is constrained by the fragile and

highly specialized supply chain.

Capacity limits: Executing multiple concurrent projects is a key risk given the

skillset required, with learnings from Vogtle critical but not yet proven at scale.

Technology: