Leggett and Platt (LEG) PT Lowered to $16 at Piper Sandler

Piper Sandler analyst Peter Keith lowered the price target on Leggett and Platt (NYSE: LEG) to $16.00 (from $18.00) while maintaining a Underweight rating.

The analyst commented, "We reiterate our UW rating and lower our PT to $16 (14x 2024E EPS) following deeper analysis of LEG's balance sheet and cash flows. Previously, our UW rating was primarily based on fundamentals with limited risk to the dividend. We are shifting our thesis somewhat as we now see probability of a dividend cut moving higher. LEG currently has a 9% dividend yield, and has increased its dividend for 51 consecutive years. Looking forward, we see LEG's leverage ratio approaching its debt covenant limit, and LEG is also in danger of losing its investment grade credit rating with another downgrade. Should LEG choose to prioritize balance sheet health and its investment grade credit rating, cutting the dividend by 50% would provide an additional ~$120M in liquidity. For our PT, we reduce our multiple assumption from 15x to 14x due to increased dividend risk."

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