The Paladin Energy Ltd (ASX: PDN) share price has been a strong performer on Wednesday.
In morning trade, the uranium producer's shares are up 9% to 76.5 cents.
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Why is the Paladin Energy share price shooting higher?
Investors have been bidding the Paladin Energy share price higher today after it was the subject of a broker note out of Bell Potter.
According to the note, the broker has upgraded the company's shares to a speculative buy rating with a 96 cents price target.
Even after today's strong gain by the Paladin Energy share price, this price target implies potential upside of 25% for investors over the next 12 months.
Why did Bell Potter upgrade its shares?
Bell Potter made the move in response to a recent pullback in the Paladin Energy share price, which it believes was "an over-reaction." It also sees value in its shares given the ongoing recovery in uranium prices from cyclical lows.
The broker explained: "We have upgraded our recommendation for PDN to Speculative Buy (from Speculative Hold), maintaining our NPV-based valuation of A$0.96/sh. The Uranium price continues to recover from cyclical lows, as limited near-term supply spurs the spot market, whilst the global path to decarbonisation re-shapes the role of nuclear energy over the longer-term."
Its analysts also highlight that Paladin Energy remains one of the best ways to gain exposure to uranium on the Australian share market and see further upside potential from upcoming events.
Its analysts added: "PDN represents the largest and most liquid exposure to uranium on the ASX, with the pending restart decision at their flagship LHM. In our opinion, further upside may come from expansion of the resource base, extending the LHM mine life and/or materially higher uranium pricing."
