DNB Markets turns neutral on salmon sector amid price gains and market uncertainty.
DNB Markets has downgraded its outlook on the salmon farming sector, shifting to a more neutral risk/reward stance following recent share price gains and rising expectations for 2025 earnings.
In a sector report released Thursday evening, the investment bank lowered its recommendations on Mowi, Grieg Seafood, and Kaldvik from ‘buy’ to ‘hold’, citing high earnings expectations and ongoing regulatory and trade risks despite the approach of peak season for spot prices.
Selective Optimism Despite Growth Projections
While DNB Markets raised its price targets on Mowi (from NOK 235 to NOK 245) and Grieg Seafood (from NOK 71 to NOK 79), it cut Kaldvik’s target from NOK 32 to NOK 29, reflecting a more cautious stance on the stock.
“Consensus on earnings per share growth is 35-76% for 2025 and 9-28% for 2026, with moderately increasing spot prices,” the report noted. “While the low valuation multiples appear attractive, they must be considered in the context of high expectations.”
DNB highlighted strong biological performance, falling feed costs, and increased demand as positive factors, but warned that these were offset by ongoing risks, including:
- The EU’s price-fixing investigation into Norwegian salmon exports
- Potential U.S. tariffs on seafood imports
- Uncertainty over new regulations in key markets
Stock-Specific Adjustments
Despite the more cautious sector stance, DNB Markets sees select investment opportunities. The brokerage finds Lerøy Seafood’s self-improvement strategy compelling, raising its price target from NOK 60 to NOK 67, and considers Salmon Evolution undervalued or mispriced.
Among its key rating changes:
| Company | Recommendation | New Price Target (NOK) | Previous (NOK) |
|---|---|---|---|
| Mowi | Hold (from Buy) | 245 | 235 |
| SalMar | Buy | 690 | – |
| Lerøy Seafood | Buy | 67 | 60 |
| Grieg Seafood | Hold (from Buy) | 79 | 71 |
| Bakkafrost | Hold | 665 | – |
| Austevoll Seafood | Buy | 133 | 125 |
| Salmon Evolution | Buy | 9.9 | – |
| Kaldvik | Hold (from Buy) | 29 | 32 |
| Icelandic Salmon | Hold | 130 | 135 |
| Arctic Fish | Buy | 80 | 85 |
| The Kingfish Co. | Hold | 5.8 | – |
| AKVA Group | Buy | 90 | – |
| Benchmark Holdings | Buy | 7.2 | – |
| Aker Biomarine | Buy | 70 | – |
Outlook: A Balancing Act
While the sector enters a key seasonal period with rising spot prices, DNB Markets believes the recent rally has already priced in much of the upside, making a neutral stance more appropriate.
Investors will now be watching how regulatory and trade risks evolve in the coming months, particularly in Europe and the U.S., where policy shifts could impact profitability.
