On Thursday, Citi initiated coverage of Boss Energy Ltd (BOE:AU) with a Buy rating and set a price target of AUD3.40. The firm highlighted the company's potential in the uranium sector, particularly through its Honeymoon Uranium Project. This project is an In-Situ Recovery (ISR) operation located in South Australia, which is expected to produce 2.45 million pounds of uranium oxide (U3O8) in the fiscal year 2027.
The Honeymoon Uranium Project is distinguished as one of the few uranium projects around the world that is prepared to begin operations in the early stages of what is anticipated to be an emerging uranium bull market. This readiness positions Boss Energy favorably in the context of the projected global supply deficit and the increasing role of nuclear energy in the global energy transition, including its applications in artificial intelligence.
Citi's analysis suggests that Boss Energy's shares are currently undervalued when compared to the movements in U3O8 prices. The firm anticipates a likely resurgence in U3O8 price momentum, which could present a long-term buying opportunity for investors, especially given the current subdued market sentiment.
The financial metrics provided by Citi indicate that Boss Energy is trading at 0.81 times Price/Net Present Value (P/NPV) and has a fiscal year 2027 Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) of approximately 3 times. Additionally, the company is projected to have a free cash flow (FCF) yield of around 17%, further underlining the investment opportunity identified by the firm.
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