Goldman Sachs initiates Primo Brands stock with Neutral rating

Investing.com - Goldman Sachs initiated coverage on Primo Brands Corp. (NYSE:PRMB) with a Neutral rating and a $25.00 price target, joining a broader analyst consensus that shows mixed sentiment. According to InvestingPro data, analyst targets range from $26 to $43, suggesting potential upside from current levels.

The investment bank views Primo Brands as a leading beverage company with significant presence in the bottled water market through brands like Poland Springs and Pure Life, along with filtration units for homes and businesses across North America. With a market capitalization of $3.9 billion and trailing twelve-month revenue of $6 billion, the company maintains a solid market position. InvestingPro analysis indicates the stock is currently undervalued based on its proprietary Fair Value model.

Goldman Sachs projects a 4% organic sales compound annual growth rate (CAGR) through fiscal year 2028, with potential for expansion into fast-growing categories like sparkling water and functional hydration products.

The firm forecasts an 8% adjusted EBITDA CAGR through FY28, driven by $300 million in cost synergies expected by FY26 following the November 2024 merger of BlueTriton Brands with Primo Water.

Goldman Sachs anticipates Primo Brands will generate $1 billion in free cash flow by FY27, potentially enabling debt reduction, dividend growth, share buybacks, and acquisitions that could yield up to 6% accretion to FY26 earnings per share.

In other recent news, Primo Brands Corp. reported its Q2 2025 earnings, which exceeded analysts’ expectations. The company achieved an earnings per share (EPS) of $0.36, surpassing the forecasted $0.26, resulting in a 38.46% positive surprise. Additionally, Primo Brands’ revenue reached $1.73 billion, significantly exceeding the anticipated $502.1 million, marking a 244.55% surprise. Despite these strong financial results, the company faced challenges related to integration issues, which were noted by BMO Capital. BMO Capital lowered its price target for Primo Brands from $45.00 to $42.00 while maintaining an Outperform rating due to these challenges and other factors such as weather disruptions and dispenser problems. Meanwhile, TD Cowen reiterated its Buy rating on Primo Brands, with a price target of $35.00, emphasizing the company’s potential for free cash flow generation. Both firms acknowledge the integration-related disruptions but maintain a positive outlook on Primo Brands’ long-term prospects. These developments highlight the mixed sentiment among analysts regarding the company’s current situation.

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