UBS downgrades Paladin Energy on 'fully priced' shares
Make us a preferred source
Make us a preferred source on Google
The news: UBS downgraded its rating on uranium miner Paladin Energy, calling the stock 'fully priced' after a 10% surge on Wednesday.
The numbers: UBS cut its rating on Paladin from 'buy' to 'neutral' but raised its price target from $9.90 to $10.
Shares in the Australian market's largest uranium company last closed at $9.19 after the sector rallied on Wednesday.
The context: Paladin reported uranium production of 638,409 for the December quarter, 10% ahead of UBS forecasts, with full-year guidance maintained at 3 million to 3.6 million pounds.
However, UBS analysts noted that the stock is now up around 32% since November. The outperformance, together with UBS' conservative uranium outlook, drove the downgrade.
Elsewhere, Morgan Stanley kept its 'overweight' rating and $10.25 price target. Bell Potter reiterated its 'buy' rating on Paladin and lifted its price target from $10.50 to $10.70. Analyst Regan Burrows called the result "positive" and "the beginning of [Paladin] turning investor sentiment around".
What they said: "While we are generally positive the [long-term uranium] thematic, we are less certain about near-term price direction and catalysts to have prices run higher (from a fundamental perspective)," UBS analysts said.
"... given the closed nature of the uranium market (i.e. with prices driven by closed-end discussions between utilities and producers) we concede it is harder than most commodities to call near-term and with limited short-term indicators."
The sources: UBS research, Bell Potter research, Morgan Stanley research
