UBS Starts Tempur Sealy (TPX) at Neutral
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UBS initiates coverage on Tempur Sealy (NYSE: TPX) with a Neutral rating and a price target of $60.00, saying improvement opportunities and stellar management balance industry risks.
Analyst Michael Lasser commented, "We see a wide range of potential outcomes for TPX's shares with the upside balancing the downside. On the positive side, TPX should see a meaningful improvement in profitability in the near term (we expect 120 bps & 140 bps of OM growth in 2H'16 & FY'17 resp.) This should be driven by solid growth in its Sealy U.S. margin (we calc. this is still 400-500 bps off its peak). That said, TPX's top-line growth will likely be muted in the NT as industry trends moderate & competition intensifies. Further, there is also a risk of lumpiness in its sales trends given the volatility in the space (its recent biz update served as a reminder). Taken together, we think risk-reward is fairly even on this stock."
Shares of Tempur Sealy closed at $57.77 yesterday.
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