Primo Brands (PRMB) is facing some caution heading into Q4 earnings, with analysts at RBC Capital Markets slightly below the sell-side consensus while in line buy-side expectations, according to a note Tuesday.

The caution stems from a smaller, less tenured user base caused by customer churn following recent service disruptions, despite positive retail scanner data, the firm said.

The company's delivery business continues to face material headwinds, though conditions are improving, and there may be additional headwinds for the direct delivery business in Q1 due to winter storm disruptions, RBC said.

The RBC analysts said they have conviction in the company's recovery narrative, despite a Q4 top-line expected to decline 7% sequentially due to a smaller, lower-spending customer base and a guidance cut, which is common when a new CEO sets expectations during a company turnaround.

Primo Brands is scheduled to report Q4 and full-year financial results on Thursday.

RBC maintained its outperform rating on the stock and a $26 price target.

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