UBS Upgrades Tempur Sealy (TPX) to Buy
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UBS analyst Michael Lasser upgraded Tempur Sealy (NYSE: TPX) from Neutral to Buy with a price target of $40.00 (from $30.00).
The analyst comments "We believe the risk-reward on TPX is skewed to the upside at current levels. While it's well-known that the NT set up is favorable, we believe the market will be surprised by the degree of strength TPX will see in 1H'21 (we est. ~35% revenue growth vs. cons. 30%). Further, we see several reasons why TPX can generate growth in 2H'21, despite tough compares. This includes an acceleration in Sealy sales, AUP increases, declines in imported beds, & incremental OEM sales. These factors should be nicely complemented by steady industry trends as demand pull-forward has been limited in the category (using ISPA data, we est. ~19 mm domestic bedding units were sold in '20 vs 19.9 mm in '19). Still, the stock is trading at 13x NTM P/E, a -15% discount to its 5-yr avg of 15x. We see ~30% upside to the current price & a favorable 2.6:1 upside/downside skew."
Shares of Tempur Sealy closed at $31.57 yesterday.
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