Analysts slash price targets after Grieg’s profit warning

Aslak Berge

Investment bank interest cools after profit warning.

On Wednesday, Grieg Seafood issued a negative profit warning after stumbling into high production costs in British Columbia and Scotland. At the same time, the pace of investment in the ambitious and costly start-up project in Newfoundland has been reduced.

The stock price plunged 15 per-cent after the news was announced. On Thursday morning on the Oslo Stock Exchange, Grieg shares were being traded at NOK 71.60, below the price targets of most investment banks following the stock.

It is not the first time Grieg Seafood has disappointed analysts, and several of them are now lowering their future expectations.

Sparebank1 Markets reduced its price target from NOK 130 to NOK 115 but reiterated the BUY recommendation.

“We are no longer letting the company have the doubt and choose to take a “wait-to-see position”. While the company claims that volumes were pushed into 2021, for the same reason we choose to consider them lost,” wrote analyst Christopher Robin Vinter in an analysis.

Swedish investment bank Carnegie wrote that “the cat is out of the bag” after the company update. At the same time, with salmon prices down to EUR 3.6 per-kilo, the bank pointed out that Grieg’s liquidity is becoming more and more stretched. Carnegie believes that the next 3-6 months can be very challenging if there are either more biological problems or if salmon prices do not return to EUR 4.5-5.4 per-kilo closer to Christmas time, reported TDN Direkt.

Risk of issue
Carnegie adjusted its price target to NOK 65 from NOK 68 but upgraded the recommendation from SELL to HOLD.

DNB Markets maintained its BUY recommendation but adjusted the price target to NOK 110 from the previous NOK 130. The investment bank does not believe Grieg Seafood will have to collect money from the capital market due to easing in loan terms up to the third quarter of 2021 and expects a significant increase in earnings going forward. Analyst Alexander Aukner sees a strong upside but pointed out that Grieg Seafood needs to restore market confidence after several weak quarters.


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