Morgan Stanley Puts These 2 Stocks on Its Buy List — Here’s Why You Should Follow

There’s no doubt about it: the stock market’s strong performance over the past few months is fueling an optimistic mood.

Driving this renewed optimism are several tailwinds – falling inflation, expectations for Fed rate cuts later this year, President Trump’s decisive (and brief) intervention in the ongoing Middle East war, and the steady decline in oil prices have all combined to support stocks and push sentiment higher.

Against this backdrop, Morgan Stanley’s Mike Wilson has been watching the situation carefully, and he writes of the cautiously upbeat outlook: “Equity markets have been resilient since bottoming in April, and the rally has been more fundamentally driven than many appreciate. While there could be some consolidation during 3Q, we remain bullish on a 6–12 month horizon as EPS tailwinds expand, and the market has line of sight to Fed cuts.”

Wilson’s colleagues among the Morgan Stanley stock analysts are following his lead and highlighting the stocks they believe are poised to benefit from this constructive setup. According to the TipRanks database, Wall Street’s consensus also sees two of these choices as Strong Buys. Let’s take a closer look and see why investors should pay attention here.

Primo Brands (PRMB)

Water is the very stuff of life, and Primo Brands has been in the business of bringing clean, pure drinking water to its customers for more than 70 years. The company got its start in the 1950s as Primo Water. In November of last year, it completed its merger with BlueTriton Brands, creating Primo Brands from the combined entity. The new ticker, PRMB, started trading on November 11 and inherited the stock history of Primo’s previous PRMW ticker.

As Primo Brands, the company offers ‘healthy hydration’ through a network of brands across the US and Canada. Primo’s services include water dispensers with 3- and 5-gallon bottles; direct delivery; bottle exchange and refills; and even water filtration services and packaged beverages. The company’s network of brands includes Ice Mountain, Poland Spring, Pure Live, Pureflo, and, of course, the eponymous Primo Water.

Primo’s water brands are available through more than 200,000 retail outlets, while its direct delivery options allow customers to purchase directly from the company. In addition, the company boasts some 26,500 bottle exchange locations as well as 23,500 self-serve refill drinking stations.

Last year, its final year of operations as Primo Water, the company generated revenues of $6.81 billion. This figure, which was up 5.4% from 2023, shows the scale of the consumer water business. Primo attributed its revenue growth to a 3.4% increase in volume gains.

For the first quarter of this year, the company’s first full quarter since the merger, Primo reported a top line of $1.61 billion, up an impressive 42.5% from 1Q24—although it came in just under the forecast, missing by approximately $6 million. At the bottom line, Primo’s non-GAAP EPS of 29 cents was up 7 cents year-over-year and beat the forecast by 6 cents per share.

This stock has caught the attention of Morgan Stanley analyst Eric Serotta, who notes that the company presents a sound entry for investors.

“We believe the recent weakness in PRMB shares presents an opportune long-term entry point in an attractive 3-5% topline growth story aligned with health/wellness trends,” Serotta said. “PRMB shares declined nearly 20% since early April on weaker scanner data, which we believe was driven by unusually wet spring weather, and short-term integration hiccups in the direct delivery business. We believe that these ST challenges are now priced in, and see a compelling 2.5:1.0 bull/bear skew, with PRMB trading at only 9x 2026e EV/EBITDA, a 20% discount to US-focused peers facing health/wellness challenges.”

For Serotta, this all adds up to an Overweight (i.e., Buy) rating, supported by a $38 price target that points toward a one-year upside potential of 24%. (To watch Serotta’s track record, click here)

This stock’s overall Strong Buy consensus rating is based on 9 positive analyst reviews, making it unanimous. The shares are currently trading for $30.7 and have an average target price of $42, suggesting that they will gain 37% in the year ahead. (See PRMB stock forecast)

Kymera Therapeutics (KYMR)

Next up on our list of Morgan Stanley picks is Kymera Therapeutics. This firm is a mid-cap biopharmaceutical company with a pipeline of drug candidates designed to attack autoimmune and inflammatory diseases, along with various cancers. The company is following a novel approach, targeted protein degradation (TPD), to enable cells to clear away disease-causing proteins. The TPD approach makes use of the cell’s existing processes for protein disposal and recycling to meet a therapeutic need that is poorly addressed by other drug technologies. Potentially, this approach can transform the ways that physicians treat diseases.

Kymera is building its protein degrader drug candidates from the ground up, using a proprietary drug discovery engine. Currently, the company’s leading drug candidate is KT-621, an oral degrader of the protein STAT6. This protein is known as a central driver of the Th2 inflammation in allergic diseases; KT-621 demonstrated inhibition of its pathway in pre-clinical studies and has recently undergone a Phase 1 clinical trial. There are multiple potential indications for this drug, including atopic dermatitis (AD) and asthma.

In an important development, Kymera reported on June 2 that the healthy volunteer segment of the Phase 1 study of KT-621 has achieved positive results. The drug candidate met its primary endpoints and demonstrated a tolerable safety profile with no adverse events. The company plans to follow up with parallel Phase 2b trials, testing KT-621 against AD and asthma. These trials are expected to begin in 4Q25 and 1Q26. Shares in KYMR jumped as much as 45% when the Phase 1 data was released.

In addition to its success with KT-621, Kymera also has collaboration projects with Sanofi and Gilead. On the Sanofi collaboration, the companies have recently announced their intention to advance the drug candidate KT-485, an oral IRAK4 degrader, to the clinical trial stage. The collaboration with Gilead was announced on June 25, and aims to develop a drug candidate that will target CDK2 in the treatment of various malignancies.

While this pipeline is only at an early clinical stage, it does show promise – and that promise has attracted analyst Judah Frommer. In his coverage of the stock for Morgan Stanley, Frommer notes the potential of Kymera’s pipeline, and the stock’s potential for investors.

“Though its candidates are in early clinical/preclinical development, we see (1) recent healthy volunteer data with KT-621 (oral STAT6 degrader) and (2) partnerships with Sanofi and Gilead as providing important derisking and validation of Kymera’s capabilities. Our $70 price target is derived primarily from the opportunities for KT-621 in atopic dermatitis and asthma, along with modest contribution from the IRAK4 collaboration; additional indications/ pipeline candidates represent upside to our price target. As such, we see favorable risk/reward at current levels with 4Q25 initial AD patient data for ‘621 the likely next key catalyst for shares,” Frommer observed.

To this end, Frommer puts an Overweight (i.e., Buy) rating on Kymera’s stock, and he complements that rating with the aforementioned $70 price target that implies a one-year upside potential of 60%. (To watch Frommer’s track record, click here)

Once again, we’re looking at a stock with a unanimous Strong Buy consensus rating; Kymera has picked up 17 positive analyst reviews to back up that rating. The stock is selling for $43.81, and its $61.33 average target price indicates that there is room for 40% share growth on the one-year horizon. (See KYMR stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.