Primo Brands Coverage Initiated: Analyst Sees EBITDA Gains From Cost Cuts, Bottled Water Momentum

BofA Securities analyst Peter T. Galbo initiated coverage on Primo Brands Corporation (NYSE:PRMB), with a price forecast of $42.

Galbo notes that Primo Brands stock is expected to appreciate over the next 12 months as the company realizes cost synergies, targeting $300 million in EBITDA by 2026.

If valuation multiples stay steady, this should support growth in enterprise and equity value.

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Additional positives include bottled water’s rising share in U.S. liquid refreshment beverages and reduced focus on the category by other CSD producers, which could improve overall profitability.

The North American-based bottled and packaged water producer, which has 30 brands, including Poland Spring and Pure Life, was formed from the November 2024 merger of Primo Water and Blue Triton.

Galbo recalls that Primo Brands initially projected ~$200 million in cost synergies by 2026 at the time of its merger, later raising the target to ~$300 million (22% of FY24 combined adjusted EBITDA) during its February 2025 investor day.

While such projections are often met with skepticism, in Primo’s case, the company has clear overlapping costs to cut across brands, headcount, factories, fleets, and depots over the next seven quarters.

Favorably, by the end of 1Q25, Primo was already achieving ~$20 million in quarterly synergies, with limited reliance on harder-to-achieve revenue synergies.

The analyst observes that U.S. bottled water has outpaced total liquid refreshment beverages. This has boosted bottled water’s volume share to 38.4%, up from 36.7% in 2019 and 30.7% in 2014.

The trend is expected to persist as U.S. consumers increasingly favor healthier options over carbonated soft drinks.

Galbo sees additional support for Primo Brands’ 3%-5% annual net sales growth target in its ongoing expansion of premium offerings, including Saratoga and Mountain Valley.

For FY25, the analyst’s adjusted EBITDA forecast of $1.610 billion includes $200 million of synergies, implying the remaining $63 million of incremental YoY EBITDA is driven almost entirely by sales growth as opposed to underlying operational improvement.

Likewise, the FY26 EBITDA assumes no underlying operational improvement, with the analyst’s $1.756 billion estimate driven mainly by $100 million of synergies.

Price Action: PRMB shares are trading higher by 2.95% to $33.17 at last check Wednesday.

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