Jefferies Upgrades Somnigroup (SGI) to Buy

Jefferies analyst Jonathan Matuszewski upgraded Somnigroup (NYSE: SGI) from Hold to Buy with a price target of $88.00 (from $90.00).

The analyst comments: "The ~25% retreat in shares provides an attractive set-up for the #1 producer & retailer of bedding, which has radically strengthened its moat via verticalization over the past 12+ months. Rising input costs will weigh, but we see L-MSD % pricing largely offsetting headwinds. We trim '26 EPS, but keep our ~24% CAGR through '28E intact. Logistics & ad-related deal synergies in '27E & beyond support our view that mgmt's multi-yr plan is achievable. Move to BUY.

We estimate that ~35% of SGI's COGS is commodity-driven, and as such, anticipate pressure from chemicals influencing the price of foam, steel, as well as other raw material inputs. That said, we also see a bedding category where post-Liberation Day price increases have been modest relative to overall CPI, leading us to not anticipate significant elasticity if SGI were to pursue a +MSD% price hike beginning in 2Q or 3Q. For perspective, our math would imply a $42 increase on a $1,000 queen mattress vs. pre-Iran War pricing."

For an analyst ratings summary and ratings history on Somnigroup click here. For more ratings news on Somnigroup click here.

Shares of Somnigroup closed at $74.71 yesterday.

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