Paladin Energy Ltd (ASX: PDN) shares have been on fire in recent weeks.
So much so, the uranium developer's shares are up a massive 34% since this time last month.
This has been driven by decade-high uranium prices and optimism that they will continue to climb in the coming years.
Is it too late to buy Paladin Energy shares?
While one leading broker believes that the company's shares can keep rising from current levels, it doesn't feel that the risk/reward is compelling enough to recommend it as a buy.
According to a note out of Bell Potter this week, its analysts have downgraded Paladin Energy's shares to a speculative hold rating with an improved price target of $1.31.
This implies a potential upside of almost 17% for investors from current levels.
What did the broker say?
The broker believes that Paladin Energy shares deserve to trade at a premium at present. It explains:
We have updated our valuation and recommendation for PDN ahead of the restart of Langer Heinrich in Mar-24 and given the recent price action in underlying uranium markets. We argue that restart operations like Langer Heinrich should trade at a premium in the current market given the relatively lower risk to greenfield developments, increased liquidity to smaller cap peers and the potential for strategic consolidation (takeovers).
However, as the company is still classed as speculative, the broker requires a potential return of 30%+ to recommend it as a buy. Hence it's downgraded to hold. It adds:
In accordance with our ratings structure, we downgrade our recommendation to Speculative HOLD.
Bell Potter prefers Deep Yellow Limited (ASX: DYL) and has a speculative buy rating and $1.84 price target on its shares. This implies a potential upside of 34% for investors from current levels.
