Balancing Near-Term HOD Headwinds with Valuation Upside: Reaffirming Buy on PRMB Amid Integration Challenges and New Leadership Catalysts

Eric Serotta, an analyst from Morgan Stanley, maintained the Buy rating on Primo Brands. The associated price target was lowered to $26.00.

Eric Serotta has given his Buy rating due to a combination of factors that balance near-term operational headwinds with attractive longer-term valuation upside. Although he trimmed his 2026–2027 revenue and EBITDA forecasts to reflect a slower recovery in the direct delivery (HOD) business and the loss of a portion of that customer base, he notes that these revised figures are largely aligned with what many investors already expect. He acknowledges that the business is unlikely to return to year-over-year growth until the second half of 2026 and anticipates cautious initial 2026 guidance as the company invests to stabilize operations under new leadership. Nonetheless, he believes the company is working through integration challenges and that its execution will remain under close investor scrutiny.

Serotta’s constructive stance is anchored in the stock’s current valuation, which he sees as already discounting much of the operational risk. With PRMB trading around 7x his reduced 2027 EV/EBITDA estimate—similar to more structurally challenged consumer packaged goods peers—he argues that modest operational improvements could support meaningful share price appreciation. He lowers his price target from $28 to $26, reflecting the reduced estimates and a slightly lower target multiple, yet still implying considerable upside from the current price. Additionally, he views the arrival of the new CEO, who has deep experience in route-based and beverage businesses, as a potential catalyst for improved execution and a gradual re-rating of the stock as the direct delivery segment stabilizes.

In another report released on December 19, Bank of America Securities also reiterated a Buy rating on the stock with a $20.00 price target.