Morgan Stanley on Wednesday opened coverage of BioMar Group, the Denmark-based aquafeed company, assigning an "equal-weight" rating and setting a price objective of 121 Danish crowns. The brokerage described the stock as "fairly priced" relative to comparable companies even as it acknowledged a robust medium-term growth profile for the business.
BioMar shares closed at 111.80 crowns on July 7, which the broker says implies roughly an 8% upside to its 121-crown target. At that target price the company would trade at about 12.2 times estimated 2026 EV/EBIT, a multiple Morgan Stanley noted is "broadly in line with the chemical distributors peer group."
While the analysts signaled support for BioMar's fundamental prospects and its unique market position, they said they would "stand on the sidelines in the near term". The near-term caution reflects two central concerns: substantial input cost inflation and uncertainty around El Niño, both of which the firm warned could have a "potentially less fully controllable impact on (near-term) earnings."
The brokerage's modelling assumes a raw material basket inflation of 20.5% in the second quarter of 2026. Within that basket, Peru fishmeal prices were estimated to be up 52% year-on-year and rapeseed oil up 18% year-on-year.
Morgan Stanley pointed out that BioMar has historically been able to pass through higher input costs to customers, typically with about a one-quarter lag. However, the analysts cautioned that the current softer Norwegian salmon price environment - given that roughly 51% of the salmon division's sales are generated in Norway - could make full and timely pass-through less certain.
The note also referenced the National Oceanic and Atmospheric Administration's change of its ENSO Alert System to an El Niño advisory, with forecasts indicating a 63% probability of a very strong event. Morgan Stanley said this scenario presents additional risks to the supply of marine ingredients and to demand for shrimp feed in Latin America as well as for salmon feed in Chile.
Looking beyond the near-term risks, Morgan Stanley forecasted a 6% compound annual growth rate in sales for BioMar through 2030, coupled with a 13% adjusted EPS compound annual growth rate over the same period. The growth assumptions are driven by expansion in shrimp feed capacity in Ecuador, where BioMar targets a new 110,000-tonne facility by the fourth quarter of 2026, increasing total shrimp capacity to 410,000 tonnes. Other drivers cited include targeted penetration into China's selected species market and rising sales of functional ingredients.
The broker's valuation blended two approaches. A discounted cash flow model using a 3% long-term growth rate and a weighted average cost of capital of 6.6% produced a valuation of 113 crowns per share. Separately, a multiples-based approach using a 12.2 times peer EV/EBIT multiple - drawn from chemical distributors, salmon farmers and select ingredient companies - resulted in a valuation of 128 crowns per share. Together these approaches underpin the 121-crown price target.
Morgan Stanley also outlined scenario valuations. The bull case, which assumes a 6% volume CAGR plus operational leverage from increased sales of functional ingredients and the roll-out of acoustic feeding technology, implies a share price of 143 crowns, equivalent to 14 times 2026 EV/EBIT. The bear case, assuming a 3% CAGR and no operational leverage, yields a valuation of 82 crowns, equivalent to 9 times 2026 EV/EBIT.
Sector implications
The observations and forecasts from Morgan Stanley touch multiple parts of the aquaculture supply chain - from feed ingredient markets and ingredient suppliers to salmon and shrimp farming operations, as well as peers in chemical distribution used for valuation comparables.