Shares in Paladin Energy Ltd (ASX: PDN) and Boss Energy Ltd (ASX: BOE) have made strong gains after both were upgraded by broking house RBC Capital Markets.
And while the shares have already made substantial gains, RBC has bullish share price targets for each, which are well above current levels. We'll get to those shortly.
First, let's look at what RBC is saying.
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Uranium demand is growing on the back of new reactor projects
The broker said in its new research note to clients that momentum in the uranium sector is building, with "policy catalysts are stacking faster than supply can respond''.
For example, the US Department of Energy has made a US$17.5 billion commitment to fund 10 new AP1000 nuclear reactors, while Canada is also planning 10 new reactors by 2040.
RBC added:
Sovereign and hyperscaler demand are collectively adding demand that a structurally under-supplied market simply cannot absorb. Execution risk is pervasive, and new mines take decades to develop. The term market knows this: fixed-price deals are already transacting at $100/lb while the published $95/lb indicator lags reality. We raise our long-term price forecast to US$110/lb.
RBC said India had also made a commitment to grow its nuclear capacity 10-fold by 2047.
And in the technology market, uranium producer Cameco had "confirmed multiple term sheets with major tech companies, with the broader tech-nuclear partnership pipeline across Meta, Microsoft, Google, Amazon, and Switch spanning a combined framework of over 30 GW''.
What does this mean for ASX uranium shares?
In light of its upgraded uranium price outlook, RBC has upgraded Paladin to an outperform rating.
RBC said the company's Atlas discovery gave greater confidence in its Patterson Lake South project, underpinning life of mine production materially higher than current estimates.
RBC expects FY27 guidance to come in at 5.5 million pounds of uranium at a cost of US$45 per pound to produce.
RBC has a price target of $13.50 on Paladin compared to the current share price of $9.88, which is up 6.2% on the day.
With regard to Boss Energy, RBC said the company's fourth-quarter results should show some recovery from the weather-impacted third quarter.
RBC added:
Sales volumes are forecast at about 422klb at a realised price of about US$75/lb, driving revenue up about 12% to about US$31.6m. We upgrade Boss to Sector Perform on an improved uranium price outlook, though near-term production remains constrained pending the revised feasibility study expected in 1Q FY27.
RBC has a price target of $1.30 on Boss shares compared to $1.10, up 8.9% on the day.
