The Deep Yellow Limited (ASX: DYL) share price isn't having a great day.
In afternoon trade, the uranium developer's shares are down 2% to 76.5 cents.
The good news, though, is that one leading broker believes this weakness could be short-lived.
What's being said about the Deep Yellow share price?
According to a note out of Bell Potter, its analysts have initiated coverage on the company's shares with a speculative buy rating and $1.05 price target.
Based on the current Deep Yellow share price, this implies potential upside of 37% for investors over the next 12 months.
The broker made the move on the belief that the company's shares are trading at a bargain level in comparison to other ASX uranium shares. Particularly given its recent merger with Vimy Resources, which gives the company two significant uranium projects. The broker commented:
We initiate coverage on DYL with a Speculative Buy rating and a $1.05/sh valuation, following their successful merger with former ASX uranium developer Vimy resources (VMY – delisted). The combined entity boasts two advanced projects in the Tumas Uranium Project (TUP) and the Mulga Rock Project (MRP), with over 390mlbs in Mineral Resources, a pathway to +6mlbs annual production and an experienced team with a track record of developing uranium projects.
DYL trades on a $1.24 Enterprise Value $/lb of Resource basis, representing a 77% discount to ASX uranium peers. We estimate DYL could be producing at TUP by the end of 2025 with MRP following shortly after, in line with when Management predicts peak tightness in U3O8 supply.
All in all, the broker believes that Deep Yellow could "become a globally diversified, multi-asset producer by the middle of the decade", which could make it a great option if you're looking for exposure to uranium.
