Somnigroup (SGI) PT Raised to $67 at Raymond James

Raymond James analyst Bobby Griffin raised the price target on Somnigroup (NYSE: SGI) to $67.00 (from $62.00) while maintaining a Strong Buy rating.

The analyst comments "We reaffirm our Strong Buy rating and increase our target price to $67 on Somnigroup International. We are updating our model to include the acquisition of Mattress Firm (closed on February 5, 2025). Overall, while U.S. bedding industry demand is taking longer than anticipated to recover (demand trends for the industry still negative y/y), we see a compelling upside scenario for Somnigroup over the medium term. Specifically, Tempur Sealy on a standalone basis continues to take market share (despite continued lackluster mattress industry trends), as well as deliver improvements in manufacturing productivity (sustainable gross margin recovery; Tempur Sealy like-for-like gross margins up forecasted to be ~100 bp in 2025, on top of expansion in 2024). In addition, with the completion of the Mattress Firm acquisition, Somnigroup is a stronger, more vertically integrated enterprise that should see meaningful operating leverage as volume trends improve. Overall, while there is now integration risk associated with the Mattress Firm acquisition, we see a compelling risk/reward setup for Somnigroup to deliver solid EBITDA growth and free cash flow generation (rapid debt paydown) over the next few years and even further accelerate its already dominating position within the U.S. market. As such, we remain buyers with the recent stock pullback."

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