Tempur Sealy (NYSE:TPX) was lifted to Overweight from Neutral at Piper Sandler on Thursday, with analysts lifting the price target for the stock to $61 from $41 per share.
Analysts said the company has a strong setup for 2024 and 2025 as well as attractive Mattress Firm (MFRM) accretion potential.
"TPX has become a dominant operator within the mattress industry, with a multi-year growth outlook that is becoming highly attractive to long-term investors," argue analysts.
The firm's upgrade is based on four factors. Firstly, Piper Sandler's 2024 EPS bridge suggests EPS of $3 or more this year.
Secondly, Piper Sandler believes industry demand is trending toward stabilization/improvement and could see strong growth over the next two years, given unit demand is at 2016 and 2017 levels.
Analysts also note that TPX is entering 2024 with its strongest product line-up in years, which should provide sales benefits through 2025.
The final factor is Piper Sandler's MFRM acquisition accretion analysis, which suggests $300 million of synergies equating to $1.50 of EPS accretion, should the acquisition come to fruition. Piper Sandler believes it will.