It is fair to say that Boss Energy Ltd (ASX: BOE) shares have been absolutely smashed this year.
In fact, despite a double-digit rebound on Friday, the uranium producer's shares are down almost 50% year to date.
A good portion of this weakness has been caused by the release of a disappointing update this month which paints a worrying picture of its Honeymoon project's future.
Is this a buying opportunity or should you be staying clear of this ASX 200 uranium stock? Let's see what analysts at Bell Potter are saying about its beaten down shares.
Are Boss Energy shares a buy?
Bell Potter notes that Boss Energy's update on the Honeymoon project was very disappointing. However, it doesn't believe it is game over, especially given its bullish view of uranium prices.
The broker also believes that the company could become a takeover target given its depressed share price. It explains:
The market was broadly unimpressed by the lack of confidence in the announcement, which was based on high-level software modelling. There is inherent risk in the approach, given that wellfield spacing to such a large distance to our knowledge hasn't been conducted before. However, that doesn't mean it is not possible. Details as to the hypothesised strategy may be provided as early as 2QCY26, with a wide-spaced test scenario to be conducted initially on zones north of the Honeymoon domain.
This should provide greater clarity around the potential success of the approach. Should this fail, the likely outcome would be a lower production profile over LOM with higher AISC (which if you're bullish uranium pricing might not impact the thesis). The selloff has highlighted one possibility. If the market continues to value Honeymoon at a material discount (on our numbers current implied value is ~A$91m), BOE may become a target for groups ISR experience and a longer outlook on uranium pricing.
Big potential returns
According to the note, the broker has retained its buy rating on Boss Energy shares with a heavily reduced price target of $2.00 (from $2.90).
Based on its current share price of $1.32, this implies potential upside of approximately 50% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
We lower our TP to $2.00/sh and maintain our Buy recommendation. Our valuation assumes production at Honeymoon over the short 10Y mine life is limited to ~1.6Mlbs pa and costs remain elevated, until such a time that management have completed the work to guide otherwise.
