Upgrade Mr. Zamparo (CIBC) moved his target for Primo Water Corp. to US$18.50 from US$18 with an “outperformer” recommendation. The average is US$19.36.
“Attractive, but relatively uneventful quarters such as Q1 are a sign of success for the Primo business,” he said. “Commercial volumes have begun to recover, residential volumes remain at above-average rates, and increased EBITDA guidance this year was not much of a surprise, but is encouraging nonetheless. Primary risks are a reduction in residential consumers postlockdowns and unabated cost inflation, but we don’t view either of these as probable. If anything, we believe it’s more likely that Primo generates EBITDA above its new outlook ($380MM-$390MM). We find the recent data from re-opened economies like Israel compelling, while synergy capture and the more flexible cost structure create an attractive setup for future growth.”