“We believe Lerøy Seafood and Grieg Seafood are the best purchases now,” said Pareto seafood analyst Carl-Emil Kjølås Johannessen.
“The results from the fourth quarter were mixed. Grieg was very positive, especially the operations in Norway were very good. Bakkafrost, NRS and Lerøy all disappointed, and were also punished in the stock market,” said Johannessen to SalmonBusiness.
He stated with Bakkafrost there were problems with access to Russia, for NRS there were disease problems in Region South, meanwhile, with Lerøy there was a mix of weak results for trout and weaker than expected results in whitefish.
Various reasons for buy recommendation
After a results season with some ups and downs for the salmon shares on the Oslo Stock Exchange, there are two that stand out in favour for Johannesen. For two different reasons.
“We believe Lerøy and Grieg are the best purchases now. Lerøy has fallen a lot after Q4’s report, and we believe the discount to comparable companies is now too large,” he said.
The day before the quarterly report for the fourth quarter, Lerøy cost NOK 69 per share. Tuesday morning, the share price was NOK 62.
“With Grieg, we believe that the significant growth potential over the next two years isn’t priced in, and we expect considerable upside if they deliver on their growth plans,” said Johannesen.
Sell or don’t sell
DNB Markets analyst Alexander Aukner believes the expectations of the salmon price are too high and have a sell recommendation for most of the salmon shares.
As of today, Pareto does not have a sell recommendation for any shares.
“But we thought Salmar and Bakkafrost were relatively expensive shares. These are both very well run companies, but we believe the valuation is at the highest level,” said Johannesen.