Morgan Stanley initiates coverage with an Overweight rating on Primo Brands (NYSE: PRMB), identifying a $38 price target based on recent market conditions. The company’s recent pullback, driven by wet-spring scanner data and integration issues, presents a rare chance for potential investors.

1. EV/EBITDA Valuation Insights

• Current Multiple: 16x 2026 EV/EBITDA

• Peer Average: ~18x for U.S. beverage companies

• Morgan Stanley Target: 11x 2026 EV/EBITDA, leading to a projection of a $38 price point

Action: Verify the most recent EV and EBITDA estimates for Primo using the APIs for a clear evaluation.

2. Overcoming Weather and Integration Challenges

• Recent Scanner Data: Affected by unusually wet spring weather disrupting retail restocks.

• Direct-Delivery Dilemmas: Initial hiccups in the integration of BlueTriton channels resulted in brief inefficiencies.

• Outlook: Stabilizing summer weather and operational normalization at the Texas plant should restore volume growth.

3. Synergies Fueling Profit Expansion

• Synergy Target: $300 million by the end of 2026, representing ~23% of 2024 pro forma EBITDA.

• Revenue Growth: 21% over the past year.

• Profit Visibility: Expected synergies cushion against market fluctuations.

Tip: Utilize data APIs to comprehend the synergy’s effects on EBITDA.

4. Analyst Consensus & Stock Dynamics

• Analyst Ratings: Barclays, Bank of America, Mizuho, and RBC all share Buy or Outperform ratings with targets ranging from $40 to $43.

• Secondary Offering: 47.5 million shares sold by insiders; a $100 million buyback is confirmed.

• Implication: Partial exits by sponsors balanced by management’s pledge to maintain value support.

Conclusion

Primo Brands currently trades at a substantial EV/EBITDA discount versus its peers, setting a favorable risk-reward scenario as market challenges fade and synergy visibility improves.