Guess which ASX 200 uranium stock was just downgraded

Boss Energy Ltd (ASX: BOE) shares are having a tough start to the week.

In morning trade, the ASX 200 uranium stock is down over 5% to $5.28.

Why is this ASX 200 uranium stock sinking?

The catalyst for the weakness in the Boss Energy share price on Monday has been the release of a broker note out of Bell Potter.

According to the note, the broker believes the risk/reward on offer from its shares at present is no longer sufficient to recommend it as a buy.

As a result, this morning, the broker has downgraded the ASX 200 uranium stock to a speculative hold rating with an improved price target of $6.41 (from $5.69).

The good news for investors is that today’s decline means that this price target still implies potential upside of approximately 21% for its shares.

Commenting on the downgrade, the broker said:

We upgrade our valuation to $6.41/sh (previously $5.69/sh) on changes to our price outlook, and downgrade BOE to Speculative Hold (from speculative Buy) as the stock has out-performed peers. Uranium fundamentals continue to support our thesis being 1) advancement in Nuclear energy across the globe (60 reactors currently under construction) filtering through to a growing demand for U3O8 and 2) a lack of near-term supply as producers exited the market post Fukushima. The recent acquisition of a 30% interest in the Alta Mesa joint venture, diversifies BOE’s operations and revenue streams, making BOE one of only two geographically diversified uranium producers in CY24.

Bell Potter is now expecting the mid-term uranium price to reach a peak of US$130 per pound. Though, that could yet change depending on “the potential downgrades in production from Kazatomprom and the ripple effects on-market purchases will have to the spot price.”

Boss Energy shares are up 100% over the last 12 months.

The post Guess which ASX 200 uranium stock was just downgraded appeared first on The Motley Fool Australia.

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More reading

• Up 124% and 52% in a year, why are these 2 ASX 200 uranium shares gaining again today?
• Why Boss Energy, Cooper Energy, Judo Capital, and Polynovo shares are racing higher
• If I’d invested $20,000 in Boss Energy shares one month ago here’s what I’d have today
• Would I be crazy to buy Boss Energy shares at $5.50?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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