Loop Capital lifts Tempur Sealy stock target to $70, maintains Buy

On Wednesday, Loop Capital Markets updated its outlook on Tempur Sealy (NYSE:TPX) International Inc. (NYSE: TPX), raising the price target from $65 to $70 while reaffirming the Buy rating. The adjustment comes following a productive meeting between analysts and Tempur Sealy at the Las Vegas furniture market earlier this week. The stock, currently trading at $60.62, sits near its 52-week high of $61.60, reflecting strong market confidence. According to InvestingPro data, the company has demonstrated robust performance with a 17.12% return over the past year.

The revised price target reflects an anticipated increase in value from the potential acquisition of Mattress Firm, expected to commence in mid-2025. Loop Capital’s analysts believe that the acquisition will be a significant value addition for Tempur Sealy, which currently maintains a market capitalization of $10.52 billion. The Buy rating is predicated on the assumption that the Mattress Firm deal will be finalized, but analysts also contend that Tempur Sealy stock is a worthwhile investment even if the acquisition does not go through. InvestingPro analysis shows the company maintains a "GOOD" financial health score of 2.8, suggesting solid fundamentals regardless of the acquisition outcome.

Tempur Sealy’s stock is currently trading at a multiple that suggests it is undervalued, according to Loop Capital. The firm’s analysts estimate that with the acquisition, the stock trades at 10 times its projected 2025 enterprise value to EBITDA (EV/2025E EBITDA). Without the deal, the multiple is estimated at 13 times EV/2025E EBITDA. In comparison, the current 2025 stand-alone price-to-earnings (P/E) ratio stands at 21 times.

Loop Capital has published estimates for Tempur Sealy’s stand-alone operations to maintain comparability with the consensus. The analysts expect a decision regarding the Mattress Firm acquisition to be made by the end of the week, which could potentially impact Tempur Sealy’s stock value further.

Investors and market watchers are now looking forward to the ruling on the acquisition, which is poised to shape the company’s financial landscape and market position in the coming years. For deeper insights into Tempur Sealy’s valuation and prospects, InvestingPro subscribers can access an extensive Pro Research Report, which is part of the platform’s coverage of over 1,400 US stocks, offering comprehensive analysis and actionable intelligence for informed investment decisions.

In other recent news, Tempur Sealy International posted a steady growth in its Q3 earnings for 2024 with a 2% increase in net sales to $1.3 billion and a 6% rise in adjusted EBITDA to $275 million. The company’s GAAP EPS climbed 14% to $0.73, while the adjusted EPS grew 7% to $0.82. Meanwhile, Piper Sandler reaffirmed its Overweight rating on Tempur Sealy, with a consistent price target of $65.00, indicating strong potential for the stock.

In addition, Walmart (NYSE:WMT) Inc. has been highlighted by KeyBanc Capital Markets as a top stock pick for 2025. The retail giant has demonstrated remarkable strength with an 84.47% return over the past year and currently commands a market capitalization of $750.32 billion.

On the other hand, Piper Sandler has upgraded stocks of Tempur-Sealy, Wayfair (NYSE:W), and YETI based on sales outlook. The firm anticipates consumers will accelerate their purchases of big-ticket household durables to avoid anticipated price increases due to tariffs.

These recent developments reflect the positive outlook for these companies, with financial institutions recognizing their potential for growth and profitability. Analysts from these firms have pointed to strategic moves, such as Walmart’s acquisition of consumer electronics company VIZIO, as key factors in their positive prognostications.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.