Investment bank expects market upswing after demanding first half

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However, DNB Markets has a BUY recommendation on all salmon stocks – with two exceptions.

The salmon price has not been in the EUR 5 mark for six months. DNB analyst Alexander Aukner said he believes it will remain weak in the first half of 2021. Even weaker than he previously thought.

Increased biomass capacity in Norway in 2020, good sea growth and reduced demand have led to salmon farmers withholding 2020 volumes, which will be taken out in the first half of 2021.

“A complete normalization in society is less likely for the next couple of quarters, and we now expect the salmon price to remain weak in the first and second quarters before a recovery in the second half of 2021,” seafood analyst Alexander Aukner wrote in a recent report, according to TDN Direkt.

This year’s salmon price estimate has been reduced to EUR 5.4 per kilo, from EUR 5.8, which still implies a radical strength from current levels. The investment bank’s profit estimates for 2021 are cut at the same time by 18 per-cent.

Lerøy Seafood, Austevoll Seafood and Atlantic Sapphire are repeated as favourites in the sector. The bank continues to see a “good risk/reward” in Lerøy with a strong balance sheet and expected operational improvements in the future.

Austevoll is seen as “a derivative of Lerøy”, where the company excluded Lerøy trades at a negative value, which DNB Markets believes is baseless. Moreover, Atlantic Sapphire is expected to significantly take down the risk in its business model over the next 6-12 months.