Potential Mattress Firm sale points to further upside for Tempur, says Wedbush
Wedbush analyst Seth Basham notes that the New York Post reported that two private equity firms, Advent International and Thomas H. Lee Partners, are exploring takeover bids for Mattress Firm following a bankruptcy. The analyst views the news positively for Tempur Sealy, as it would facilitate partnerships with non-Mattress Firm retailers in the event of an Advent acquisition or the reestablishment of a partnership with Mattress Firm in the event of a THL Partners takeover. In the event that neither firm buys out Mattress Firm, Basham also sees Mattress Firm's bankruptcy as a positive for Tempur Sealy, worth $30M-$50M of incremental EBITDA based on 600-1,000 Mattress Firm store closures, and sees potential for further upside depending on which of these scenarios unfolds. The analyst reiterates an Outperform rating and $65 price target on Tempur Sealy shares.