Morgan Stanley Starts Primo Brands Corp. (PRMB) at Overweight

Morgan Stanley analyst Eric Serotta initiates coverage on Primo Brands Corp. (NYSE: PRMB) with a Overweight rating and a price target of $38.00.

The analyst comments: "We believe the recent weakness in PRMB shares presents an opportune long-term entry point in an attractive 3-5% topline growth story aligned with health/wellness trends. PRMB shares declined nearly 20% since early April on weaker scanner data, which we believe was driven by unusually wet spring weather, and short-term integration hiccups in the direct delivery business. We believe that these ST challenges are now priced in, and see a compelling 2.5:1.0 bull/bear skew, with PRMB trading at only 9x 2026e EV/EBITDA, a 20% discount to US-focused peers facing health/wellness challenges. Importantly, we expect PRMB's headwinds to dissipate in 2H with more normal summer weather recently, all lines now up and running at its tornado-damaged Texas plant, and weekly improvements in service levels in the direct delivery business. PRMB's $300M of targeted merger synergies by year-end 2026, equivalent to ~23% of 2024PF Adjusted EBITDA, enhance visibility around profit growth and provide a cushion against unexpected topline and/or cost pressures. Our $38 PT is based on an 11x 2026e EV/EBITDA multiple, a 5% discount to US beverage peers PEP/STZ/KDP due to higher private label penetration in PRMB's bottled water category and potential pressure from further sponsor stock sales."

For an analyst ratings summary and ratings history on Primo Brands Corp. click here. For more ratings news on Primo Brands Corp. click here.

Shares of Primo Brands Corp. closed at $29.56 yesterday.

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