Tempur Sealy International Inc TPX is progressing to close the Mattress Firm acquisition this year.
The Lexington, Kentucky-based company has emerged as a “dominant” player in the mattress industry and its multi-year growth outlook is “becoming highly attractive to long-term investors,” according to Piper Sandler.
The Tempur Sealy International Analyst: Peter Keith upgraded the rating for Tempur Sealy International from Neutral to Overweight, while raising the price target from $41 to $61.
The Tempur Sealy International Thesis: The company is likely to exceed the current consensus earnings estimates for 2024, Keith said in the upgrade note.
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The analyst mentioned four reasons for the upgrade:
- Tempur is likely to generate earnings of more than $3.00 per share in 2024, versus the consensus estimate of around $2.80 per share.
- Industry demand is “trending toward stabilization/improvement and could see strong growth over the next two years.”
- Tempur Sealy entered 2024 with “its strongest product line-up in years, which should provide sales benefits through 2025.”
- The MFRM acquisition could add $300 million in synergies, “equating to $1.50 of EPS accretion should the acquisition ultimately come to fruition.”
TPX Price Action: Shares of Tempur Sealy International had risen by 2.08% to $50.11 at the time of publication Thursday.