Boss Energy Ltd (ASX: BOE) shares are having a tough start to the week.
In morning trade, the ASX 200 uranium stock is down over 5% to $5.28.
Why is this ASX 200 uranium stock sinking?
The catalyst for the weakness in the Boss Energy share price on Monday has been the release of a broker note out of Bell Potter.
According to the note, the broker believes the risk/reward on offer from its shares at present is no longer sufficient to recommend it as a buy.
As a result, this morning, the broker has downgraded the ASX 200 uranium stock to a speculative hold rating with an improved price target of $6.41 (from $5.69).
The good news for investors is that today's decline means that this price target still implies potential upside of approximately 21% for its shares.
Commenting on the downgrade, the broker said:
We upgrade our valuation to $6.41/sh (previously $5.69/sh) on changes to our price outlook, and downgrade BOE to Speculative Hold (from speculative Buy) as the stock has out-performed peers.
Uranium fundamentals continue to support our thesis being 1) advancement in Nuclear energy across the globe (60 reactors currently under construction) filtering through to a growing demand for U3O8 and 2) a lack of near-term supply as producers exited the market post Fukushima.
The recent acquisition of a 30% interest in the Alta Mesa joint venture, diversifies BOE's operations and revenue streams, making BOE one of only two geographically diversified uranium producers in CY24.
Bell Potter is now expecting the mid-term uranium price to reach a peak of US$130 per pound. Though, that could yet change depending on "the potential downgrades in production from Kazatomprom and the ripple effects on-market purchases will have to the spot price."
Boss Energy shares are up 100% over the last 12 months.
