Macquarie Group Ltd (ASX: MQG) analysts have their eye on three ASX uranium stocks which they think will outperform the S&P/ASX All Ordinaries Index (ASX: XAO) over the next 12 months.
In a recent note to investors, the broker said that uranium developers are moving to be shovel-ready, but are reluctant to commit to offtake until term prices and contract floors improve.
Uranium prices increased to US$77.90 per pound on Monday, up 0.58% from the previous trading day. Over the past month, the price of uranium has fallen 1.58%, but it remains 1.63% higher than a year ago, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.
Macquarie said Paladin Energy Ltd (ASX: PDN) is its top pick for uranium producers. The broker also sees material upside for Bannerman Energy Ltd (ASX: BMN) and Deep Yellow Ltd (ASX: DYL) as their respective Namibian projects move into development.
Here's what Macquarie analysts expect from the three stocks over the next 12 months.
Paladin Energy
The Paladin Energy share price is trading in the green on Wednesday morning. At the time of writing, the shares are 0.6% higher at $8.34 a piece. That's a 3.99% drop since this time last month, likely due to slumping uranium prices, but over the year, the shares are still 22.53% higher.
Macquarie has an outperform rating on the shares and an $11.25 target price. At the time of writing, that implies a potential 34.9% upside over the next 12 months.
In its note, the broker commented that Paul Hemburrow, Managing Director and CEO of Paladin Energy, outlined the final phases ahead of the Langer Heinrich ramp-up, which is expected to occur ahead of full mining and processing in FY27.
"Mr Hemburrow indicated recoveries are stabilising within target levels and that the remaining mining fleet is expected to be in service in the 2HFY26. At the Patterson Lake Project (PLS) in Canada he highlighted the significant resource growth potential in the region which could provide upside outside of the 10-year life," the broker said.
Bannerman Energy
Bannerman shares are also in the green this morning. At the time of writing, its share price is 0.46% higher at $3.30 a piece. Over the past month, the shares have slumped 10.22% but over the year, they're 19.38% higher.
Macquarie initiated coverage on the Australian uranium stock late last week. It assigned an outperform rating and $5.50 target price to the uranium developer. That implies a potential 66.7% upside for investors over the next year.
In its note this morning, the broker stated that Bannerman Executive Chairman Brandon Munro has outlined the company's flagship Etango uranium project, located in Namibia, and noted that it is fully permitted with a clear pathway to development.
"Etango will be a conventional open pit with heap leach processing at 8Mtpa throughput, and excavation of heap leach ponds and primary crusher site has commenced," Macquarie said.
Deep Yellow
The Deep Yellow share price is 3% higher this morning to $1.72 a piece, at the time of writing. Over the month, the uranium stock has shed 17.05% of its share price, but the shares are still a whopping 42.15% higher than this time last year.
Late last month, Macquarie reduced its 12-month target price for Deep Yellow shares by 4% to $1.95 each, citing concerns about delays. Despite the cut, the target price still suggests a potential 13.4% upside ahead for investors, at the time of writing.
Macquarie highlighted that Deep Yellow CFO and acting CEO, Craig Barnes, and head of business development, Andrew Mirco, have provided an overview of the business and the company's strategy surrounding the de-risking of the Tumas Project. It included detailed engineering, procurement, early works, power, and water supply.
"The company also indicated that the appointment of a new CEO/MD is imminent, and that this was unlikely to slow down the path to FID significantly given the team John Borshoff had built around him at DYL has strong project execution capabilities and an operational skill set," Macquarie said in the note.
