On Wednesday, Raymond James adjusted its stance on Primo Water Company (NYSE:) inventory, shifting its ranking from Sturdy Purchase to Outperform, with a worth goal set at $21.00. The adjustment comes as the corporate’s shares have seen a major 19% improve because the starting of the 12 months, nearing a three-year peak.
The agency cited a number of optimistic developments for Primo Water, together with the sale of its European operations to Culligan, which allowed for a discount in debt. Moreover, the corporate has expanded its share buyback program and introduced a 3rd consecutive annual dividend improve. Moreover, Primo Water is on monitor for its eighth straight 12 months of EBITDA progress.
Regardless of these optimistic indicators, Raymond James believes that a lot of the “simple cash” has been made with Primo Water’s inventory. The agency identified that beneath the management of the brand new CEO, Robbert Rietbroek, who took the helm in January 2024, the corporate lacks operational catalysts as a result of nature of its enterprise.
The potential for mergers and acquisitions, notably with small native water distributors, is famous as the one important catalyst on the horizon. Nevertheless, the timing of such actions stays unsure, and Raymond James clarified that its estimates don’t account for potential future M&A actions.
The agency maintains that there’s nonetheless potential for the inventory to succeed in its goal worth, albeit with much less upside than previous to the inventory’s latest rally. Raymond James means that it could search for a rise in M&A actions earlier than contemplating a revision of its goal worth for Primo Water.
InvestingPro Insights
As Primo Water Company (NYSE:PRMW) approaches its three-year peak, the most recent information from InvestingPro underscores a number of key metrics that traders could discover pertinent. With a market capitalization of $2.91 billion and a latest worth near its 52-week excessive, the inventory shows a powerful efficiency with a 1-month worth complete return of 13.38% and an much more spectacular 3-month worth complete return of twenty-two.4%. This aligns with Raymond James’ statement of the inventory’s important improve because the starting of the 12 months.
InvestingPro Suggestions spotlight Primo Water’s excessive shareholder yield and spectacular gross revenue margins, which stand at 64.17% for the final twelve months as of This fall 2023. These figures are reflective of the corporate’s monetary well being and environment friendly administration, which might be contributing components to the agency’s eight consecutive years of EBITDA progress. Furthermore, analysts have revised their earnings upwards for the upcoming interval, with the expectation that internet earnings will develop this 12 months.
For traders trying to delve deeper into Primo Water’s potential and discover further InvestingPro Suggestions, there are extra insights accessible on the platform. With a further 10 suggestions listed, traders can achieve a complete understanding of PRMW’s efficiency and future outlook. Make the most of coupon code PRONEWS24 to get a further 10% off a yearly or biyearly Professional and Professional+ subscription at InvestingPro for an in depth funding evaluation.
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