Boss Energy or Paladin Energy? ASX uranium sector expert views
A major broker initiates coverage on ASX uranium – cautious on near-term prospects but sees longer-term potential – favouring BOE over PDN.
Boom. Everyone jumps on board. Bust. Many get stuck wondering when their stocks will retrace to their entry points, let alone climb back to their record highs. Welcome to investing in ASX commodity stocks!
The issue is not always with the stocks themselves, whilst they have control over their operations, they generally do not have control over the demand and supply of their shares – and therefore any wild swings in their share price.
They also generally don’t have control over the price of the commodity they’re producing or aiming to produce, and it’s more likely the commodity’s price that is booming or busting – causing investors to win big or lose bigger. It’s been like this since before a tulip cost as much as a windmill.
And it will keep happening, but this doesn’t mean investors should shun commodity stocks. On the contrary, if one can get the boom part of the equation right, there’s potentially life changing wealth to be created.
Timing is everything as they say in the classics, and this is the broad view of a new research report on the ASX uranium sector released by local broker Evans & Partners (“E&P”). "Cautiously optimistic” is probably the major theme of the report, as the broker singles out its top pick among ASX uranium producers. Let’s investigate the key takeaways from the report.
Growing institutional interest in uranium
Retail investors tend to be close to the pulse of the next big thing in commodities, but E&P notes the uranium sector has been increasingly on the radars of institutional investors over the past 12-18 months. There’s growing optimism around nuclear power’s role as a dependable, cost-effective, and low-carbon source of baseload energy, the broker suggests. The shift in sentiment is occurring amid a broader reassessment of global energy needs, with uranium increasingly viewed as a linchpin in the transition to a zero-carbon future.
Yet, over the past 6-12 months, both the spot-uranium price and the stock prices of ASX listed uranium stocks have delivered a reality check. After peaking above US$105/lb early last year, the uranium spot price has retreated to around US$64/lb, and whilst it’s contentious whether the spot price or the higher term contracting price (presently +US$75/lb) is more important, E&P notes the spot price remains “an important driver of sentiment” among investors.
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E&P’s clients (and I am guessing, you!) are now asking: Does this dip constitute a buying opportunity? The broker’s response, in the form of this week’s research report titled “Uranium Initiation - Out of the wilderness but not out of the woods?” is nuanced. While E&P remains tactically cautious in the near term, citing lofty price expectations and execution risks as projects ramp up, it sees a compelling medium-term case for the ASX uranium sector, driven by nuclear power’s longer term strategic importance.
Uranium price pragmatism
E&P notes uranium will play an important role in reshaping the world’s zero-carbon energy generation needs for the next 50-100 years. This conviction stems from a view that nuclear power can deliver consistent, clean energy at scale – a rare combination in the renewable landscape.
However, the firm tempers this enthusiasm with a dose of pragmatism, noting that significant demand growth may not materialise until “the early 2030s”. This is because Western reactor restarts are limited, new builds face lengthy timelines of 5-10 years or more, and Small Modular Reactors (“SMRs”) remain a distant commercial prospect.
On the supply side, the outlook hinges on production increases from Kazakhstan and Africa, which together are projected to drive roughly 70% of primary supply growth between 2025 and 2027. Kazakhstan alone is expected to contribute an additional 18.5 million pounds over this period, making it a pivotal player.
E&P flags Kazakh production trends as the critical factor influencing uranium prices over the next 12-24 months. Despite challenges like sulfuric acid shortages, the firm anticipates a resolution – via new plants or third-party supply – keeping supply growth on track.
This leads E&P to a sobering (for many uranium bulls!) near-term forecast: a “modest supply surplus in the near term”. The surplus will likely be fuelled by resilient Kazakh output and should keep uranium prices under pressure. The firm predicts spot prices to average US$69/lb this year, rising only marginally to US$70/lb from 2026 onward.
These figures are at least 15-20% below consensus estimates, notes E&P, suggesting the broader investing community is currently too bullish with their short-to-medium term uranium price forecasts. Consensus is anticipating a deficit-driven rally to US$90-100/lb over the next 3-years, proposes the broker, who notes their long-term price assumption of US$70/lb per is more consistent with all-important industry cost curves.
E&P believes that some of the broader market’s bullishness is baked into equity valuations, and despite recent declines, ASX uranium stocks still trade at implied prices at or above its uranium price modelling. This implies the potential for further downside should the market begin to align with our view, says the broker.
“Where could we be wrong?”, ponders E&P
That’s the bad news for uranium bulls, now here’s the good news. E&P acknowledges that no forecast is ironclad. It outlines three scenarios where its cautious stance towards the uranium price could falter – potentially sparking an upside surprise.
1. Kazakhstan’s production could stumble: Persistent operational hiccups or delays in Kazatomprom launching a new sulfuric acid plant might slash output below expectations (Kazatomprom is the Kazakh state-owned uranium producer, responsible for around 40% of global uranium production). E&P models a sensitivity case with Kazatomprom production 10% below its base forecast, tipping the market into a modest deficit of 2-3% of demand – enough to lift prices. “Kazakh production trends and sulphuric asset commentary will be a key driver of uranium prices over the next 12-24 months,” E&P warns.
2. Investors shrug off near-term surpluses and fixate on long-term growth: There has been a decoupling of uranium stock prices from the commodity’s spot price over the past 6 months, as attention shifts to Western demand drivers like energy security, AI, and data centre growth. Positive developments, like reactor restarts, life extensions, or new builds, could buoy stock prices even if supply outpaces demand temporarily. (However, with implied pricing already at or above US$70 per pound, E&P questions how much further this optimism can stretch!).
3. Short squeeze ignites a rally: ASX uranium heavyweights Boss Energy (ASX: BOE) and Paladin Energy (ASX: PDN) rank among the ASX’s most shorted stocks, with short interest currently around 15-20% of market capitalisation. E&P attributes this to concerns over ramp-up risks and, in PDN’s case, debt pressures. Successful project execution or favourable macro news could trigger a rapid unwind, propelling stock prices higher.
E&P's ASX uranium sector views
Drilling down to ASX-listed players, E&P expresses a clear preference for BOE over PDN as both navigate project ramp-ups over the next 6 months. BOE’s Honeymoon project in South Australia is outperforming initial guidance, with a recent cost update beating consensus. This operational edge, coupled with a robust balance sheet (net cash) and a capital-light growth pipeline, positions BOE for stronger near- and medium-term cash flows. E&P also sees lower jurisdictional risk in BOE’s Australian and U.S. projects compared to Paladin’s operations in Namibia and Canada.
Paladin, meanwhile, faces headwinds at its Langer Heinrich mine. Challenges with stockpile grades, water access, and an aggressive ramp-up schedule have dampened confidence. E&P is particularly sceptical about Paladin’s Patterson Lake South development, baking in a 50% capex overrun and a two-year delay. These factors, alongside higher debt levels, tilt the risk-reward balance toward an investment in BOE.
Conclusion
“It is difficult to call the exact bottom in uranium equities”, concedes E&P, but the recent pullback is encouraging in that it has reduced some of the gap between the firm’s uranium price forecasts and stock price valuations. The broker feels that further short-term weakness could be a chance to build a position in BOE, its top pick in the sector. “We are encouraged by the recent pullback and would look to add / build a position in Boss Energy,” the research note states.
E&P has initiated coverage on BOE with a “Positive” rating and a $3 target price. It has initiated coverage on PDN with a “Negative” rating and a $5.70 target price. For investors, the broker’s message is clear: The uranium story has legs, but timing and stock selection will be critical.
Evans & Partners (E&P) is a respected Australian financial advisory and wealth management firm, renowned for its deep expertise in equity research and investment strategy. With a strong track record spanning decades, E&P serves institutional and high-net-worth clients, delivering insightful, data-driven analysis on market trends and sector opportunities. The firm’s research is widely regarded as a trusted resource in the investment community, blending rigorous fundamentals with forward-looking perspectives. Headquartered in Melbourne, E&P has built a reputation for independence and precision, making it a go-to authority for navigating complex markets like the ASX uranium sector.
This article first appeared on Market Index on Thursday 6 March 2025.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.
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Investing is risky. Inevitably you will endure losses. If you can't cope with losing, don't invest.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
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