Shares of Primo Brands Corporation PRMB have been under pressure following soggy spring weather that dampened bottled water sales across key regions, such as the Northeast and Mid-Atlantic.
BofA Securities analyst Peter T. Galbo reiterated the Buy rating on Primo with a price forecast of $42.
Galbo notes that cooler and wetter weather in the Northeast and Mid-Atlantic, especially over Memorial Day weekend, hurt demand.
With summer heat arriving, Galbo sees potential for a rebound in demand—especially for regional powerhouses like Poland Spring and Deer Park—as favorable forecasts shift momentum.
The analyst also introduced a new summer weather tracker for the company, which will be updated regularly given that the second and third quarters account for roughly 53% of annual sales, and biweekly NielsenIQ scanner data offers timely insights.
Also Read: Primo Brands Coverage Initiated: Analyst Sees EBITDA Gains From Cost Cuts, Bottled Water Momentum
Since bottled water consumption closely tracks temperature and rainfall, Galbo plans to highlight key weather trends from the prior week and include National Oceanic & Atmospheric Administration, or NOAA forecasts for the week ahead.
The analyst highlights that Nielsen scanner data for the week ending May 31, showed a 3.7% year-over-year decline in retail volumes for Primo Brands in May.
Today’s Best Finance Deals
The drop was largely driven by an 8.4% slide in Poland Spring sales, a brand sold only in the Northeast. Record rainfall, including the third-wettest May since 1895 with 6.6 inches of precipitation (per NOAA), likely hurt demand.
Galbo predicts that Nielsen data for the week ending June 7 will show a sequential improvement in year-over-year sales trends for Poland Spring and Deer Park.
Warmer and drier-than-usual weather across the Northeast and Mid-Atlantic/South should support a rebound from the prior week’s sharp declines of -18.6% and -9.3%, respectively.
Galbo notes that NOAA’s latest forecast calls for higher-than-normal temperatures across much of the U.S., particularly in the Southeast and Southwest—key regions for brands like Deer Park, Ozarka, Arrowhead, and Zephyrhills.
Heavier rainfall is expected in parts of the South and Upper Midwest. This could weigh on Ozarka and Ice Mountain sales. Meanwhile, arid conditions in the West may benefit Arrowhead.
Read Next:
Image: Shutterstock