Boss Energy Ltd (ASX: BOE) shares have been heavily sold in 2024 and are down more than 35% this year amid a softer commodity market.
But the ASX uranium stock has been punished more than enough, according to one top broker.
Citi analysts have initiated coverage on the uranium miner with a buy rating with a price target of $3.40 per share.
Boss shares are fetching $2.63 apiece at the time of writing, giving Citi's valuation a potential 29% upside from the current price. Let's check out the details.
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Boss Energy shares sitting pretty
Boss Energy's flagship asset is its Honeymoon Uranium Project in South Australia. According to Citi, Honeymoon is primed to ramp up production if demand for nuclear fuel booms.
Uranium prices have been in a downtrend for the last 12 months, but they are significantly higher than prices six years ago. Today, they command US$77.80 per tonne, versus US$28.95 on December 3, 2018.
Citi is bullish on the uranium segment, and with Boss Energy shares heavily depressed this year, it reckons now is a good time to own the stock. According to The Australian Financial Review:
Shares appear oversold compared to movements in [uranium] prices and expectations of likely renewed upward price momentum soon… we see a long-term buying opportunity amid subdued market sentiment.
Bell Potter also rates Boss a buy and is especially bullish on its investment acquiring a 30% stake in the Alta Mesa Uranium Project in Texas.
Bell Potter says there is now "optionality" around its Honeymoon site due to the "low risk and low-cost regional resources" nearby.
It sees value in Boss Energy shares and values them at $5.70 apiece, well ahead of Citi's view.
Is uranium demand on the rise?
Firms like Tribeca Investment Partners are also bullish on the future of uranium. The company reckons incoming US president Donald Trump's policies will "be good" for uranium, and in turn, Boss Energy shares.
But it's the long-term demand forecasts that have investors talking. According to The World Nuclear Association, the world needs double the current available nuclear power by 2040 to meet demand.
Looking ahead to 2040, utilities have 1.5 billion pounds of cumulative uncovered uranium requirements. As a result, we believe we are still in the early innings of the contracting cycle.
It also notes that Australia has the largest available uranium reserves, estimated at 1.68 million tonnes, which equals 28% of the world supply.
With that in mind, perhaps Australia, in general, is well-positioned for any impending uranium boom.
Time will tell what happens from here.
A long-term play for uranium investors
Boss Energy shares have fallen onto the radar of brokers who say it is well placed to fuel any uptick in uranium demand.
While global uranium prices are depressed this year, experts project global demand will surge in the coming decades. In the last 12 months, Boss Energy is down 37%.
