Big returns could be on offer from Boss Energy Ltd (ASX: BOE) shares in 2025.
That's the view of analysts at Bell Potter, which believe the ASX 200 uranium stock could be destined for a major re-rating in the near future.
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What is the broker saying about this ASX 200 uranium stock?
According to the note, the broker is expecting Boss Energy to post a large increase in production volumes during the second quarter.
And while costs are expected to be elevated, Bell Potter believes that these will trend lower in the second half as new columns ramp up. It said:
BOE is scheduled to release its 2QFY25 result on the 29th of Jan. At Honeymoon, we estimate drummed production of 150klbs U3O8 for 2QFY25, which implies a 67% increase QoQ. We estimate IX column 1 operates at capacity (BPe 90%) over the quarter, whilst column 2 averages 29% capacity over the quarter, in-line with the 4QFY24 operating metrics for IX column 1. We assume the PLS leach tenor drops from 71mg U3O8/l in 1QFY25 to 60 mg U3O8/l and recoveries drop from 97% to 95%. Under these assumptions, production through the IX plants would be 166klbs for the quarter.
We have assumed a delay to the drying and packaging circuit, estimating 90% of production is drummed (4QFY24 49% and 1QFY25 81% a steady increase QoQ). As for costs, we estimate a C1 cost of A$69.71/lb (US$45/lb) over the quarter, which as mentioned in our Dec-12-2024 note, should trend lower over 2HFY25 to average A$62/lb (US$42/lb), as column 2&3 are ramped up.
Uranium bull market
Bell Potter continues to believe that there will be a multi-year uranium bull market based on its data.
It notes that "fundamentally, the data continues to suggest higher prices across the entire nuclear fuel chain over the coming years."
In light of this, its analysts believe that this ASX 200 uranium stock could be seriously undervalued at current levels. Especially if it delivers a quarterly update in line with its expectations.
Bell Potter has retained its buy rating and $4.75 price target on the company's shares. Based on its current share price of $2.61, this implies potential upside of 82% over the next 12 months.
Commenting on its buy recommendation, the broker said:
We have marked to market our uranium price and foreign exchange rates for 2QFY25. We continue to view BOE as being attractively priced (FY25 Forward EV/EBITDA 6.6x) vs peers, which could warrant a re-rate post the 2QFY25 result, should production and costs track in-line with our expectations. We maintain our conviction in Uranium and Nuclear over the coming 12m and our Buy recommendation and $4.70/sh Target price for BOE.
