Diamond Equity Research Digs Deep Into This Sustainable Seafood Ticker

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Blue Star Foods Corp. BSFC is currently trading at around $2 a share at the time of writing. Some analysts are predicting that the price could experience a jump.

A bold claim requires evidence. As well as its continuing strong focus on global sustainability practices giving it an edge over competitors, the company’s development of its Recirculatory Aquaculture System (RAS) technology division stands it in very good stead, according to an analyst report from Diamond Equity Research.

Blue Star acquired Canada-based Taste of BC Aquafarms Inc. (TBC) in June 2021 with a view to operating the first commercial-scale RAS salmon farming operations in British Columbia. The company has since identified a site at Deep Bay, BC, for a production facility.

“The acquisition of TBC earlier this quarter provided us with the talent, resources, and experience to accelerate our seafood production through Recirculating Aquaculture Systems (RAS), which we believe is the future of our industry,” John Keeler, CEO and chairman of Blue Star said at the time of the acquisition.

TBC is expected to scale its operations to produce 21,000 metric tonnes (MT) of the product by 2028, versus just 100 MT of current production, noted analyst Hunter Diamond. If those figures come to fruition, revenue for the company’s RAS operations is expected to increase dramatically to more than $170 million by 2028, compared to just $0.7 million currently.

“We believe land-based RAS salmon farming can meet the gap between the growing global demand for seafood and a supply that is limited by its environmental impact,” Diamond wrote. “While other companies are pursuing a similar RAS strategy, we believe that the opportunity is massive, leaving space for multiple winners and that Blue Star holds key competitive advantages with its acquisition of an already revenue-generating and profitable business.”

Other Seafood Varieties In A Similar Boat

Blue Star has also been busy in the RAS sector with its crab business.

Until now, the company’s crabmeat has been sourced from countries in Asia, including the Philippines and Indonesia. 

With Blue Star’s December 2021 agreement to acquire RAS technology assets of South Carolina-based Gault Seafood LLC, the company will now be able to not only source Atlantic Blue Crab in the United States but also be able to harvest the crab outside of the regular season.

In early 2022, Blue Star will initiate operations at its pilot facility to optimize the process, train employees, and secure crab supply before moving to the commercial RAS farm in early 2023, Diamond noted.

“We believe this is a positive development that allows Blue Star to potentially seize the off-season market opportunity with a high anticipated profit margin,” he said.

While Blue Star’s revenue is expected to be stable for the fiscal year 2021 compared with FY 2020, the company could post estimated revenue of $46.33 million in FY 2022, Diamond noted.

Blue Star products are available in a wide range of stores owned by the likes of Walmart Inc. WMT and Kroger Co.’s KR King Soopers supermarkets.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

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