DNB Markets believes seasonal price hikes can pull salmon stocks further

Aslak Berge

DNB Markets analyst Alexander Aunker believes salmon stocks have more to offer, despite solid recovery since midsummer. 

The forward pool for Fish Pool shows expectations of a sharp rise in prices towards Christmas. ILLUSTRATION: Fish Pool

The report stated:

“Both our estimates and the consensus estimates in the market assume salmon prices going forward will be below prices reflected in the forward contracts. Forward prices for 2018 have also increased in the last week, and in addition there could be a seasonal upturn in the short-term prices for the next few weeks,” according to TDN Finans.

As previously reported by SalmonBusiness, there is currently a very significant deviation between the salmon stock Fish Pool’s price expectations, the mirror in the so-called forward basket, and the prerequisites and estimates of the brokerage houses that follow the salmon stocks.

As seen from the attached chart, the actors who shop at Fish Pool expect a significant price increase from today’s level at around €5.38 per kilo – up to close to €7 in December. The salmon price is then expected to remain at this level until June 2018.

Against the stream
The salmon stocks, as illustrated by Marine Harvest, have undergone a fair price increase throughout the summer and early autumn – although the underlying spot price for salmon has fallen during the period.

Marine Harvest’s stock price. ILLUSTRATION: Nordne

Based on price targets, DNB Markets believes that The Scottish Salmon Company and Norway Royal Salmon have the greatest potential upside at the moment.

In direct returns in terms of dividend, Marine Harvest is highlighted as the most attractive choice. The brokerage house has a purchase recommendation on the stock, with a price target of €17.7.