Morgans has released a research report into the uranium market, and the takeaway is that Australian-listed uranium miners are well placed to take advantage of a global shortage of the resource.
Morgans has a buy rating on Paladin Energy Ltd (ASX: PDN) and NexGen Energy Ltd (ASX: NXG), and an accumulate rating on Boss Energy Ltd (ASX: BOE), with bullish price targets on the first two companies. We'll get to the specifics of those later.
Firstly, why do they think the market for uranium will perform well?
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Demand exceeding supply
The Morgans team said uranium has moved to a "structurally constrained market", with two decades of low uranium prices, "leaving an industry short of capital, development-ready projects and spare capacity just as reactor demand begins to accelerate''.
Morgans said the current bull market is different from previous cycles, which were driven by temporary supply distortions.
They said:
Today's upswing is being driven by harder‑to‑reverse forces: a structural supply deficit, a geopolitical reshaping of nuclear fuel chains, and a demand surge with no credible non‑nuclear substitute.
The Morgans team noted that China currently has 38 nuclear reactors under construction, while the US is targeting 400 gigawatts of new nuclear by 2050.
They added:
More than 20 nations have pledged to triple global capacity by 2050, with China, France, India, Russia and the US alone underpinning close to 1,000 GW of forecast capacity by mid-century. Every one of those reactors requires uranium from tightening global supply. Over the past five years, utilities have contracted materially less uranium than reactors consumed, creating a large and growing unfunded supply gap. With reactor demand set to accelerate into 2040, amid decarbonisation pressures, energy security concerns and AI‑driven power growth, nuclear is emerging as the only scalable, zero‑carbon baseload option.
Shares looking cheap
On the company front, Morgans said Paladin offered both near-term production and a world-class development asset.
They noted that the company's Langer Heinrich mine was ramping up towards its nameplate capacity of six million pounds per year.
They added:
Bolted onto that producing asset is Patterson Lake South in Canada, a fully-owned, bottom-quartile-cost development project backed by a completed feasibility study.
Morgans has a price target of $13.05 on Paladin shares compared with $10.44 currently. The shares are currently up 85.7% over 12 months.
Regarding NexGen Energy, Morgans said it was a single-asset company at the moment, "but that asset is Rook I, one of the most consequential undeveloped uranium deposits on the planet''.
Morgans said at peak production, Rook I would deliver 25 to 30 million pounds of uranium oxide per year.
They added:
The project is fully permitted, with construction imminent, and positioned in the bottom quartile of the global cost curve. In a market chronically short of Tier-1 supply, Rook I is the best answer in decades.
Morgans has a price target of $20.80 on Nexgen, compared to $14.96 currently. Nexgen is up 79.7% over the past year.
