Primo Brands (PRMB) stock is still undervalued despite its movement year-to-date, after Q2 results that surpassed consensus revenue estimates, RBC Capital Markets said in a Thursday note.

In Q2, the company's Direct Delivery business returned to positive growth, which was one quarter earlier than expected and signified a significant improvement from the last quarter, swinging to 0.4% from negative 3%, RBC analysts said. The business is making investments to improve execution, productivity, and customer experience in a bid to boost operational performance and accelerate growth, according to the note.

Primo Brands' Retail business delivered strong and widespread growth across all channels, with its Saratoga and Mountain Valley brands growing premium net sales by over 30.5% combined for the quarter, the analysts said.

The company boosted its full-year comparable net sales growth guidance to a range of 2% to 4% from the previous range of 1% to 3%, based on the quarter's outperformance and the increasing momentum across its Direct Delivery and Retail businesses, the note said.

RBC maintained the company's stock rating at outperform and raised the price target to $31 from $28.

Price: 23.93, Change: +0.02, Percent Change: +0.08