'Honeymoon over': What brokers think of Boss Energy after shares bombed 50%

Boss Energy's warning of production problems at its Honeymoon Mine led the market to dump shares pronto.
Tom Richardson

Livewire Markets

Uranium miner Boss Energy (ASX: BOE) just showed why resource investing carries huge risk around commodity price downturns, operating blow-ups, and shattered share prices. 

Boss's meltdown falls into the operating problems category, after it flagged disappointing drilling results that will lead to higher costs and a potentially smaller-than-expected uranium resource. 

The horror combo saw shares crater 50%, which is enough to ruin a retail investor's week. 

So it's worth joining some brokers to parse through the wreckage and consider whether this popular stock can recover its losses after tumbling from $3.89 last week to $1.80 on Wednesday.

This broker says Boss is still a "speculative" buy 

There's a sliver of light as specialist resource broker Canaccord Genuity is keeping telling investors to keep their chin up as it reckons the stock is still a "speculative buy", with a $3.50 share price target. 

"Resource continuity at [Boss's] Honeymoon [deposit] has proven to be far lower than anticipated. In short, the capex required for drilling will increase substantially, and there will naturally be question marks on resource to reserve conversion," Canaccord told investors. 

The broker has reduced its production and operating profit forecasts for FY 2026 and upped its cost expectations, but still values the stock at $3.50 based largely on the assessed production value of its Honeymoon and Alta Mesa deposits. 

Bell Potter also thinks you should buy

Bell Potter is also sticking to a buy rating with a $2.90 target price based largely on the assessed net present value of its Honeymoon and Alta Mesa assets.

"At face value, the [stock] sell-off looks over extended, however our confidence in forward guidance is low," analyst Regan Burrows told investors. 

Bell Potter's optimism is partly based on its view that uranium prices will continue to rise over the long term as demand starts to overtake the still limited supply. 

"We suspect the market is continuing to digest the new information, and quite frankly is coming to terms with the lack of information. We take the view that uranium prices will continue to rise over the coming years, and that will provide margin relief for BOE should production costs remain elevated," Bell Potter said. 

Citi sticks to its Boss

Broker Citi is also not giving up on Boss and reckons the diabolical price action is an opportunity for uranium believers to jump aboard. 

"We revert to a 100 % DCF [discounted cash flow]-based valuation and remove our 20 % NAV premium due to increased execution risk seeing our target price down to A$2.70. 
"Despite the reset, we maintain Buy given the sharp share price correction and our conviction in uranium’s structural bull case."

These brokers are more cautious on Honeymoon heartbreak

Macquarie, for example, is neutral on the stock and has slashed its valuation by 49% to $2.25 per share on lower production and higher costs. 

Elsewhere, Euroz Hartleys' analyst Steven Clark slashed its price target 56% from $5.10 to $2.80, with the broker's rating reduced from buy to hold. 

Ord Minnett also reckons dudded uranium bulls should hold onto their stock even though it has cut its price target from $4.10 to $1.91. 

The broker added that the increased uncertainty around Honeymoon's uranium output means its "uncertain about BOE's value."

 "BOE’s share price took a beating on negative guidance," it said. "The key lines were that recent drilling at the eastern end of Honeymoon had found less continuity in the mineralised horizons than assumed in feasibility studies. This suggests that more wells will be needed, meaning higher sustaining capex, and it also challenges Honeymoon’s nameplate."

There's no doubt the honeymoon is over for investors and this lesson is probably most valuable in underscoring the risks around speculating in the resource space. 

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Please note Tom Richardson has no financial interest in any security mentioned in this wire. Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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Tom Richardson
Journalist, senior editor
Livewire Markets

Tom covered markets as a Markets Reporter & Commentator at the Australian Financial Review for nearly five years. Prior to that he was the Managing Editor of The Motley Fool Australia leading a team of around 20 investment writers during a...

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