Freedom: Uranium producer Energy Fuels has 25% 2-month upside ahead of 3Q results

Shares of Energy Fuels, whose market capitalization on the NYSE American is just over $3.8 billion, could rise almost 25% by early November, Freedom Broker argues in a short-term trade idea. The company is the largest uranium producer in the U.S. and rapidly becoming a vertically integrated player in rare earth metals. The market is underestimating this, Freedom argues. Energy Fuels is expected to publish its third-quarter results on November 2 (the company has yet to confirm the date).

Energy Fuels stock could rise to $18 per share over the next two months, Freedom Broker reckons (the note was seen by Oninvest). That translates into upside of almost 25% versus its closing price on Friday.

Energy Fuels is the largest uranium producer in the U.S. Uranium is in short supply, while demand is set to rise as data centers require more nuclear power, Freedom writes. Nuclear reactors required around 67,000 tons of uranium in 2024, but that figure is expected to more than double to 150,000 tons by 2040. Meanwhile, according to estimates from Sprott, an asset manager specializing in precious metals and critical materials, uranium demand will exceed supply by around 567,000 tons through 2045.

Energy Fuels is a direct beneficiary of U.S. government policies aimed at reviving the nuclear industry, Freedom notes. The company owns a uranium mine and the White Mesa Mill, the country’s only operating conventional uranium processing facility, which gives it control over the entire supply chain.

At the same time, Energy Fuels is making a strategic pivot into rare earth metals. In June, it agreed to acquire the legal entities comprising the VAC group from U.S. investment firm Ara Partners. VAC operates magnet manufacturing facilities in North America, Europe, and Asia. The magnets are used in electric vehicles, wind power generation, and the defense industry. In August, Energy Fuels completed its acquisition of Australian rare-earth producer Australian Strategic Materials.

Freedom believes the market is still underestimating this pivot. Energy Fuels shares have fallen 49% from their 52-week high to $14.50 apiece and now trade at a significant discount.

The biggest risk for the company lies in those acquisitions, Freedom cautions. Integrating VAC while simultaneously completing the ASM acquisition requires significant managerial and financial resources, and any delays could disappoint the market.

Energy Fuels remains unprofitable. In the second quarter, its net loss rose 54% year over year to $33.6 million, primarily due to transaction-related costs. The company has sufficient liquidity for now, but it may need to raise capital in the future, creating a risk of dilution for existing shareholders.

All 10 analysts covering Energy Fuels have a “buy” rating on the stock. The average target price is $25.70 per share, implying 77% upside over the next 12 months from the Friday close.