Boss Energy (ASX: BOE) delivered a standout December quarter report earlier this week, exceeding production expectations and maintaining strong cost control guidance for FY25-26. The stock closed 5.6% higher on 28 January in response to the update.
However, uranium stocks have faced headwinds this week after China's AI competitor DeepSeek raised concerns that more energy-efficient AI models could dampen electricity demand from power-hungry data centres. As a result, despite its recent bounce, Boss Energy shares remain down 5.3% for the week (Monday-Wednesday).
Despite the volatility, analysts from Macquarie and Jefferies reaffirmed their bullish outlook on the uranium producer.
"Boss Energy remains one of our top uranium picks given its leverage to the ramp of two uranium projects, Honeymoon (2.45Mlb) and Alta Mesa (1.5Mlb at 30% ownership), and largely uncontracted exposure to uranium prices," Macquarie analysts said in a note on Thursday.
Honeymoon produced 215,319lbs of uranium, up 96% from the previous quarter
Honeymoon remains on track to meet FY25 production guidance of 850,000lbs
C1 cost guidance for 2H25 is A$37-41/lb (US$23-25/lb)
Atla Mesa ramp-up in progress, Boss to receive first shipment of 35,181lbs from the project
Alta Mesa expected to reach full operational capacity of 1.5lb per annum by 2026 (Boss' share of production is 30% or 450,000lbs)
Total sales for the quarter of 200,000lbs at an average realised price of US$77.50/lb, totalling US$15.5m (A$25.2m)
The December quarter production figures were 75% above Jefferies forecasts of 123,400lbs and 36% above consensus expectations of 157,400lbs. This outperformance was attributed to the NIMCIX columns 1 and 2 operating at nameplate capacity, with Column 3 commissioned during the quarter to further boost production through 2025.
Macquarie had anticipated a "more dramatic increase in cash costs for FY25-26" due to sector-wide inflationary pressures. However, they were "pleasantly surprised" to see cost guidance of A$37-41/lb for 2H25, with a pathway to A$29-32/lb over the life of mine.
Similarly, Jefferies noted the impact of cost inflation but saw it as in line with industry trends over the corresponding period.
From an earnings perspective, Boss generated US$15.5 million in revenue at an average realised price of US$77.50/lb — higher than Paladin Energy's US$66.90/lb in the same quarter.
"Boss has now sold 200,000 lb in each of the last two quarters, cash/liquids at ~$100 million in December, Encore loan likely to be called in the next quarter (A$30-35m) and uranium inventories of 1.1mlb," noted the analysts.
Macquarie's revised outlook flipped its FY25 earnings forecast from a loss of 3.2 cents per share to a profit of 6.2 cents per share. The firm also increased its FY26 and FY27 earnings per share forecasts by 13% and 15%, respectively, to 19.2 cents and 31.6 cents.
| FY25e | FY26e | FY27e |
---|---|---|---|
Uranium price (US$/lb) | 81.7 | 85 | 85 |
Production (Mlb) | 0.05 | 0.17 | 0.29 |
Revenue (A$m) | 112 | 214 | 317 |
NPAT (A$m) | 25 | 78 | 129 |
EPS (cents) | 6.2 | 19.2 | 31.6 |
Macquarie maintained an Outperform rating while raising its price target by 7% to $4.80.
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