Paladin Energy Ltd (ASX: PDN) shares have had a turbulent year so far in 2024, down 23% since January.
The uranium miner's shares have slipped more than 20% in the past month alone.
Still, brokers and fund managers are bullish on the uranium sector's outlook, Paladin Energy shares included. Let's see what's in store for the uranium miner and if this presents a compelling opportunity.
Why are Paladin Energy shares lower this year?
Paladin Energy shares have been heavily sold this year along with the broader uranium basket. But there have been company-specific factors contributing to the declines too.
Paladin's Langer Heinrich mine, its flagship operation in Namibia, has faced production issues this year that led to a reduction in FY25 guidance in early November.
The company revised its output targets to 3 to 3.6 million pounds of uranium, compared to an initial range of 4 to 4.5 million pounds. Management cited overambitious forecasting and water supply disruptions.
But the setbacks did nothing to ease investor concerns, with Paladin also dealing with potential delays in its proposed $1.5 billion acquisition of Fission Uranium Corp. The deal has been stalled due to scrutiny from the Canadian government.
Adding to the pressure, Paladin has become the most shorted stock on the ASX, with short interest climbing to 14.7%, compared to about 3% in June.
Uranium upside?
Experts are bullish on the long-term outlook of uranium despite prices compressing to lows of US$77.85 per pound at the time of writing, down from US$95 per pound in May. This could be positive for Paladin Energy shares.
Tribeca Investment Partners thinks there are tailwinds for the sector, whereas the World Nuclear Association estimates we need to double the world's nuclear power by 2040. Uranium is used in nuclear energy production.
According to The Australian Financial Review, Bank of America forecasts a US$120 per pound uranium price by 2025, growing to US$140 per pound by 2027.
Meanwhile, Citi is also bullish on the sector, expecting a jump in prices. Citi rated fellow ASX uranium stock Boss Energy Ltd (ASX: BOE) a buy this week over Paladin Energy shares.
Brokers and fund managers are bullish for FY25
Despite the obvious challenges, a handful of experts are bullish about Paladin's long-term outlook.
Small cap manager Blackwattle identifies Paladin as uniquely positioned to capitalise on the "chronic undersupply of uranium".
Unlike developers, Blackwattle says Paladin is already a producer, giving it an advantage in meeting rising demand from nuclear energy projects globally.
Bell Potter also rates the stock a buy with a price target of $9.70. The broker acknowledges near-term volatility but believes the teething issues at its Langer Heinrich site could be a risk.
Consensus also rates the stock a buy, according to CommSec. All nine analysts covering Paladin Energy shares sit on this side of the fence.
Meanwhile, consensus estimates project Paladin to earn 17 cents per share this year, 50 cents per share in FY26, and 74 cents in FY27, as seen in the table below. This equals a two-year growth rate of 38%.
| Year | Consensus earnings estimate | Year over year growth |
| FY25 | 16.9 cents per share | -37% |
| FY26 | 50.5 cents per share | 198% |
| FY27 | 74.9 cents per share | 48% |
Foolish takeaway
According to top brokers and fund managers, the outlook for Paladin Energy shares in FY25 is fairly bullish. However, the debate hinges largely on the price of uranium.
Due to changes in energy trends, tailwinds could see prices drift higher. But there's no saying whether this will flow to the stocks of uranium miners. Time will tell.
In the last 12 months, Paladin shares are down 20%.
