THE share price of the Norwegian owned Leroy Seafood Group has been upgraded by the company's brokers 14 per cent on the strength of rising salmon prices.
The move Handelsbanken Capital Markets, increases the share value of Norway's leading seafood exporter and one of the biggest farmed salmon producers from 110 Norwegian kroners (about £11.75p) to 140 kroners (£14.95p).
Handelsbanken said the upgrade was based on strong salmon prices and a tight market this year, signalling that salmon is about to become more expensive.
Handelsbanken analyst Tore Ostby said: "For the salmon farming business, our estimates are based on an average price of 31 kroners per kg £3.31p) in 2010 (previously 29kroners ) and 28 kroners in 2011.
"The spot price on salmon hit an all-time high of 31 kroners in the last week of January. The forward price is now 32 kroners for April to June, provided that the global demand in 2010 is expected to drop by 5-7 per cent. Handelsbanken expects flat seafood sales this year and a stable operating margin of below three per cent.
Leroy Seafood is Norway's second largest producer and has no exposure to Chile, where salmon production has been ravaged by the outbreak of disease.
The Lerøy Seafood Group offers a wide range of seafood products, but mainly salmon and trout, internationally through selected distributors to producers, large households and consumers. It carries out its business through subsidiaries in Norway, Sweden, France and Portugal as well as a network of sales offices to ensure presence in key markets both nationally and internationally.
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