Why now is the time to buy to buy this ASX 200 uranium stock

Analysts think this stock could be a great way to gain exposure to the booming uranium industry.

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If you're wanting some exposure to the uranium industry, then read on!

That's because analysts at Bell Potter are tipping strong returns from the ASX 200 uranium stock listed below.

Which ASX 200 uranium stock is a buy?

The company in question is uranium miner Paladin Energy Ltd (ASX: PDN).

As a reminder, on Tuesday, the ASX 200 uranium stock released an update on its Langer Heinrich Mine (LHM) in central western Namibia.

Paladin Energy advised that both uranium concentrate production and drumming were achieved at LHM on 30 March 2024. This is a big positive as it means that Paladin Energy will now be able to capitalise on the sky high prices that uranium is commanding.

This has caught the eye of analysts at Bell Potter. In response to the news, the broker has changed its rating from speculative buy to just buy and increased its price target to $1.65.

Based on its current share price of $1.44, this implies potential upside of almost 15% for investors over the next 12 months.

Commenting on the news, Bell Potter said:

PDN announced it had produced the first drums of uranium concentrate (U3O8) from its uranium restart operation, Langer Heinrich Mine (LHM), in-line with its March quarter guidance. The announcement marks an important milestone in returning LHM to production and the first step towards targeting a 6Mlb pa run-rate. PDN will build inventory for approximately 3-months we estimate, putting them in a position to begin shipments at the end of 4QFY24 or beginning 1QFY25.

No longer a speculative buy

As I mentioned above, Bell Potter has now removed its speculative tag from its recommendation. It explains:

Our target price for PDN lifts slightly to $1.65/sh (previously $1.60/sh) on the restart of production. With a line-of sight to first revenue and cashflow we have removed the speculative rating and maintain our Buy recommendation.

Its analysts have then laid out three key reasons why it thinks that Paladin Energy is an ASX 200 uranium stock to buy right now. It concludes:

We reiterate our investment thesis on PDN being 1) LHM is a proven asset in a known uranium mining jurisdiction with a comparatively low restart risk, 2) At full capacity LHM will be a top ten producer supplying 6Mlbs pa by FY26 (BPe), and 3) uranium market fundamentals remain robust, with ~140Mlbs in global long-term offtake contracted over CY23 (124Mlbs CY22), adding to a tight short and mid-term market and continual growth in reactor adoption increasing demand over the long term.

Paladin Energy's shares are up 120% since this time last year.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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