Marine Harvest ASA (MHG) climbed the most in almost seven months in Oslo trading as tightening fish supply and rising prices boost the earnings outlook for the world’s largest publicly-traded salmon farmer.
The Oslo-based company advanced as much as 5.3 percent, the most since Aug. 24, and traded 5 percent higher at 5.515 kroner as of 10:50 a.m. local time. That makes it the biggest gainer today on the Stoxx Europe 600 Index.
“Salmon spot prices have recently developed better than expected in Europe and especially the U.S.,” Nordea Markets analyst Kolbjoern Giskeoedegaard said in an e-mailed note. “While the latter was dominated by oversupply just a couple of months ago, sentiment is now dominated by tightness and soaring prices.”
Shares in salmon producers tumbled in 2011 as prices slumped 60 percent to 18 kroner ($3.09) a kilogram (2.2 pounds) from April to October amid rising production from Norway and Chile, the world’s two largest fish farmers. Output from Chile increased as farmers resumed supplies after the infectious anemia virus sickened fish and ravaged its farms in 2007.
Selling prices have since recovered to about 36.51 kroner, according to the latest NOS Clearing prices compiled by Fish Pool ASA, a clearing house for financial contracts on salmon. Prices will average about 34 kroner this year and 35 kroner in 2014, according to Nordea estimates.
A recovery in prices is expected to continue in 2013 as supply growth levels off, creating a “much better” balance between supply and demand, Marine Harvest Chief Executive Officer Alf-Helge Aarskog said in an interview on Feb. 6. Demand in Europe including Russia is “exceptionally good” and the company is seeing a “positive trend” in the U.S., Mexico and Brazil, he said at the time.
Nordea upgraded its recommendation on Marine Harvest to strong buy from buy and increased its 12-month price target to 6.6 kroner from 6.4 kroner, Giskeoedegaard said.
Shares in Marine Harvest, in which Norwegian billionaire John Fredriksen owns a 21.4 percent stake, have gained 83 percent during the last 12 months, giving the company a market value of 20.7 billion kroner.
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