Paladin Energy Ltd (PDN.AU) shares plummeted 5.07% in Tuesday's trading session, following a downgrade in price target by Morgan Stanley and concerns over the company's weak fiscal year 2026 outlook.

Morgan Stanley reduced its price target on the Australian uranium producer to A$7.30 from A$7.45, while maintaining an "equal-weight" rating. The downgrade comes despite Paladin Energy's strong Q4 production results and the mining restart at Langer Heinrich. The primary factor behind the revised outlook is the company's soft FY26 guidance, which has raised concerns among investors.

According to Morgan Stanley's analysis, Paladin Energy's FY26 production of triuranium octoxide, a crucial feedstock for nuclear power plants, is expected to be weaker than anticipated. The forecast range of 4.0-4.4 million pounds is attributed to potential variability in ore feed and allowances for maintenance and dewatering downtime. This outlook has overshadowed the positive developments in the company's recent performance, leading to the sharp decline in stock price. Year-to-date, Paladin Energy's stock has now suffered losses of 11.4%, reflecting ongoing challenges in the uranium market and company-specific issues.