Street Calls of the Week
Investing.com - UBS maintained its Neutral rating and $7.00 price target on Sleep Number (NASDAQ:SNBR) ahead of the company’s third-quarter earnings report, due October 22. The stock currently trades at $6.17, down significantly from its 52-week high of $20.73, with InvestingPro analysis indicating the stock is currently undervalued.
The investment firm expressed caution about Sleep Number’s upcoming financial results, noting the company remains in the early stages of its turnaround efforts. Recent data shows concerning trends, with revenue declining 14.4% in the last twelve months, despite maintaining impressive gross profit margins of 60.3%.
UBS does not believe Sleep Number’s top-line trends have shown significant improvement in the third quarter, suggesting the company likely implemented more aggressive cost reductions to protect its profit and loss statement.
While UBS acknowledges further opportunities exist for cost rationalization, it indicated such an approach would not inspire confidence in the overall health and trajectory of Sleep Number’s business.
The firm warned this situation could keep further downside risk on the table, particularly as Sleep Number faces tightening debt covenants and an upcoming credit agreement maturity next year.
In other recent news, Sleep Number Corp reported a substantial earnings miss for the second quarter of 2025. The company posted an actual earnings per share (EPS) of -$1.09, significantly below the forecasted -$0.11, resulting in an EPS surprise of 890.91%. Additionally, Sleep Number’s revenue fell short of expectations, totaling $328 million compared to the anticipated $357.42 million, marking an 8.23% shortfall. These recent developments reflect challenges in meeting financial projections. Analysts and investors might closely monitor these figures to assess the company’s future performance. The earnings announcement has drawn attention from various financial analysts and firms. While the current figures are concerning, the broader implications for Sleep Number’s market position remain to be seen.
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