Perimeter Solutions (PRM) outpaced expectations during last year's mild fire season, helped by a stronger US wildfire response, but slower volume growth is likely heading into a more typical fire season, UBS Securities said in a Monday note.

According to the report, with the stock up roughly 120% in 2025, 2026 is expected to be a transitional period with limited upside potential, the analysts said.

UBS expects 2026 adjusted earnings per share to fall about 7% year-on-year, driven by higher management compensation linked to the stock's strong performance.

The brokerage noted that the USDA/Forest Service contract stabilizes pricing with little impact on 2026 earnings, while PRM's $685 million Medical Manufacturing Technologies acquisition is unlikely to deliver immediate synergies, with cost benefits expected in 2027.

The firm downgraded its rating on the stock to neutral from buy but raised its price target to $31 from $30.

Shares of Perimeter Solutions were down 2.3% in recent trading.

Price: 28.88, Change: -0.76, Percent Change: -2.56