With many analysts tipping the uranium market as a great place to be in the coming years, investors may be looking for investment options in the space.
The good news for these investors is that a leading broker believes that one ASX uranium stock is a buy and could rise materially from current levels.
Which ASX uranium stock?
According to a note out of Bell Potter this morning, its analysts are tipping Boss Energy Ltd (ASX: BOE) shares as a buy with a slightly trimmed price target of $5.75 (from $5.90).
Based on its current share price of $3.60, this implies potential upside of 60% for this ASX uranium stock over the next 12 months.
To put that into context, a $10,000 investment would be worth $16,000 by this time next year if Bell Potter is on the money with its recommendation.
What did the broker say?
Bell Potter has been looking at the company's quarterly update and notes that the Honeymoon project is performing better than expectations. It said:
Comparing to the figures in the enhanced feasibility study, which estimated a flow rate of 1,560m3 /hr for the 3 IX columns (520m3 /hr per column = ~1M m3 per Qtr at 90% availability) and a 47mg/l tenor from the PLS provides the indication that operationally, Honeymoon is doing better than anticipated. The question is, what has the market factored in and where are we in reference to that?
The broker highlights that there are two potential scenarios for near term production. One could potentially have significantly positive implications for the ASX uranium stock. It explains:
We've run two scenarios, assuming flow rates remain constant, with the exception of lower tenors of 47mg/l in the pregnant leach solution (PLS) and lower recovery (95%). The difference in each scenario is timing of commissioning, defined as filling the IX columns with PLS. Under the first scenario, we assume commissioning at the beginning of the quarter, similar to IX 1 which was commissioned in early Apr-24, and the second scenario we assume a mid-quarter commissioning. The greatest variability outside commencement of commissioning will be the PLS tenor and recovery. Should the current conditions hold, BOE is in a comfortable position to beat guidance and consensus for FY25 production, in our opinion. Visible Alpha production consensus is 850Mlbs for FY25, scaling from 103klbs in Sep-Q to 321klbs in Jun-25.
Time to buy
In light of the above and the uranium bull market, the broker thinks that now could be the time to invest. It concludes:
We continue to see value in BOE at these levels, with the market remaining cautious on production and uranium prices over FY25. BOE needs to rebuild the momentum and faith in the market, which in our opinion will occur over the next six months as they prove the ramp up of Honeymoon and Alta Mesa.
