Boss Energy Ltd (ASX: BOE) shares have been under pressure this week.
So much so, the ASX 200 uranium stock tumbled over 8% on Thursday and hit a new 52-week low.
While this is disappointing, one leading broker believes that it could have created a buying opportunity for investors that are looking for exposure to the uranium industry.
Though, it is worth noting that the uranium industry is a high risk area of the market. So, it may not be suitable for investors with a low to average tolerance for risk.
What is the broker saying about this ASX 200 uranium stock?
Bell Potter notes that Boss Energy recently released its results for FY 2024.
And while the result itself was a little on the mixed side, it hasn't been enough to diminish its positive view on the stock. It said:
BOE reported EBITDA of $10.6m (BPe $9.2m), an underlying Net Loss of $13.5m (BPe $6.4m) and a statutory net profit of $44.5m (BPe $55.5m), largely in-line with our expectations at the EBITDA level, however a surprise tax expense deviated our NPAT estimate to the actual result.
FY24 was a transformational year for BOE, which saw the commissioning of its Honeymoon Uranium project and first drummed uranium production in April-24. BOE completed the transaction to purchase a 30% JV in Alta Mesa, an in-situ-recovery uranium restart project in Texas.
It also highlights that the company could be well-placed to outperform production estimates in FY 2025. The broker adds:
Our estimates for production (and consensus estimates) for FY25 are currently 850klbs, which we see as conservative. We believe there to be upside risk to these estimates, however BOE will need to prove commissioning of columns 2 & 3 over 1HFY25.
The key catalyst to determine if Honeymoon is running ahead of consensus will be 1QFY25 results in October.
Very big returns
The note reveals that Bell Potter has reaffirmed its buy rating on the ASX 200 uranium stock with a slightly trimmed price target of $5.70 (from $5.75). Based on its current share price of $2.78, this implies massive potential upside of 105% for investors over the next 12 months.
To put that into context, a $5,000 investment would grow to be worth just over $10,000 by this time next year if the broker is on the money with its recommendation.
Overall, Bell Potter thinks this makes Boss Energy one of the best ways to gain exposure to this side of the market. It concludes:
BOE remains one of our top picks in the Uranium space, given its leverage to a rising price environment and low cost ISR operations across two western jurisdictions.
