Investing.com – BMO initiated coverage on Primo Brands (NYSE:) with an Outperform rating and a strong price target, calling the stock an attractive pick given its large share of the U.S. water brand market.
BMO rated the stock at Outperform with a $40 price target, representing nearly 30% upside from Primo’s Friday closing price of $31.07.
The brokerage said Primo’s current price represents an “attractive opportunity at an attractive entry point” and expects the firm to deliver strong adjusted EBITDA growth driven by strong sales and healthy margins.
BMO expects the firm to see revenue growth of at least mid-single digits thanks to the support of its brands. This paves the way for adjusted EBITDA margins to reach the mid-20% in the coming years, the brokerage said.
Primo was formed last year through the merger of the Primo Water and BlueTriton brands and owns several major packaged drinking water brands, including Poland Spring, Pure Life, Mountain Valley and Saratoga.
BlueTriton was the North American subsidiary of European consumer giant Nestle SA (SIX:), which sold its bottling operations to private equity in 2021.