Shares in Boss Energy Ltd (ASX: BOE) have been riding on a sawtooth these past few months and fallen from a high of $2.92 in late November.
Prices are now down more than 25% for the month. Despite the recent pullback, the uranium specialist's shares are still more than 178% in the green this year to date alongside many of the company's ASX energy peers.
The recent volatility could present a few near-term opportunities according to some, especially those at Bell Potter. Let's take a closer look.
What's Bell Potter saying about Boss Energy shares?
Bell Potter is bullish on the ASX energy sector, noting that global energy demand rebounded strongly during 2H 2021.
Conditions were improved with the easing of lockdown restrictions and a recovery in industrial activity coinciding with low inventory levels and a constrained supply-side response, BP says.
According to the broker, these factors have led to market deficits across the energy complex and led to multi-year supercycles in Brent crude, Newcastle thermal coal, LNG futures, and uranium.
Moving forward, the firm reckons that "growing regulatory and financing pressures for replacement projects in energy markets should support commodity prices and sector free cash flow generation in the medium term" for incumbent producers.
These factors could bode well for Boss Energy, especially as global uranium markets are recovering from a cyclical low. Bell Potter says this means limited new supply in the near term and demand increasingly driven by decarbonisation efforts.
The recent listing of physically-backed investment vehicles has "further highlighted the uranium market's tight supply-demand balance" in BP's opinion. This could be another positive factor in Boss's investment case.
BP also notes that Boss Energy's Honeymoon uranium project in South Australia is fully permitted and on care and maintenance. BP analysts say entering uranium supply agreements to support a final investment decision for a restart at Honeymoon over the next twelve months is "the key value catalyst for Boss Energy".
It also notes that Boss has "exploration upside across tenements adjacent to the Honeymoon project".
With these points in mind, the broker is bullish on the direction of Boss Energy and rates the company as a speculative buy on a $3.47 valuation. At the time of writing, this implies an upside potential of 52%.
Boss Energy share price summary
In the past 12 months, the Boss Energy share price has soared more than 249% after rallying more than 178% this year to date.
Over the last month, it has reversed course, however, continuing a month-long trend into the red and is down 25% in that time.
At the time of writing, the Boss Energy share price is $2.27, up 4.13% in early morning trade.
