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On Monday, Mizuho (NYSE:MFG) initiated coverage on Primo Brands Corp. (NYSE: PRMB) with an Outperform rating and set a price target of $43.00, adding to the bullish consensus among analysts who set targets ranging from $40 to $48. According to InvestingPro data, the stock is currently undervalued, with a market capitalization of $5.1 billion. The research firm highlighted Primo’s potential to capitalize on the increasing consumer trend towards healthy hydration. Following the company’s merger with BlueTriton in November 2024, Primo has emerged as a leading U.S. branded beverage company with a focus on water products.
The analyst at Mizuho pointed out that the shift away from sweetened beverages towards healthier options has been a notable trend for over three decades. Primo Brands is well-positioned to continue benefiting from this trend, thanks to its innovative flavor offerings, attention to unhealthy ingredients, and concerns over tap water quality. These factors are expected to sustain the growth of the bottled water market. The company’s strong positioning is reflected in its impressive revenue growth of 21% in the last twelve months, with analysts forecasting 36% growth this year.
Primo’s diverse portfolio, which spans various sales channels, price points, and package sizes, is seen as a major strength. The company’s assets are substantial, including 90 spring source locations and a wide-reaching distribution network that serves over 200,000 retail outlets. Additionally, Primo’s direct-to-consumer operations have a significant footprint, delivering to 3 million customers.
Mizuho’s price target of $43.00 is based on approximately 13 times the firm’s estimated calendar year 2025 EBITDA, aligning with the valuation multiples of U.S. Food and Beverages peers. The firm also suggests that there is potential for Primo Brands to outperform consensus estimates through fiscal year 2026, driven by synergies from the BlueTriton merger and inherent operating leverage within the company’s business model. InvestingPro analysis shows the company maintains a FAIR financial health score, with particularly strong growth metrics. For deeper insights into Primo’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 8 additional ProTips and extensive financial metrics.
In other recent news, Primo Brands Corporation announced that two stockholders affiliated with One Rock Capital Partners (WA:CPAP) are selling 47.5 million shares of Class A common stock. The proceeds from this secondary offering will go entirely to the selling stockholders, with BofA Securities, Inc. and Morgan Stanley (NYSE:MS) serving as underwriters. Concurrently, Primo Brands has agreed to repurchase $100 million worth of its Class A common stock from these stockholders in a private transaction. In analyst updates, RBC Capital Markets maintained its Outperform rating for Primo Brands, citing strong fundamentals and a favorable risk-reward balance. BMO Capital Markets also reiterated an Outperform rating, highlighting the company’s growth potential and strategic positioning despite minor adjustments to sales forecasts. Additionally, Truist Securities initiated coverage with a Buy rating, noting the advantages of Primo Brands’ recent merger and its strong market position. On a different note, Primo Brands shares experienced a notable increase following a viral TikTok video featuring its Saratoga Spring Water, which was shared by influencer Ashton Hall. The video has garnered approximately 670 million views, contributing to heightened interest in the company’s premium brands.
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