Tempur Sealy International (TPX) could see further upside after the company received a favorable court ruling for its proposed $4 billion acquisition of mattress specialty retailer Mattress Firm Group, UBS Securities said in a note e-mailed Monday.
Tempur Sealy secured clearance for the deal after a federal judge in Texas rejected a claim by the US Federal Trade Commission that the acquisition would hurt consumers, Blomberg News reported Friday.
The ruling is expected to be a positive catalyst for the Tempur Sealy stock and increase the market's view on the company's earnings power potential over the next few years, UBS analysts, including Michael Lasser, said in a note to clients.
"Over the next few years, we see upside potential to management's [$100 million] synergy target," the analysts said. "Importantly, we also still see a path to further upside for shares ahead from here."
UBS said its updated base case for pro forma combined earnings calls for close to $5 of EPS power in 2028.
The brokerage raised its price target on the stock to $78 from $67 and maintained its buy rating.
Tempur Sealy shares were up 6% in recent trading.
Price: 66.48, Change: +3.33, Percent Change: +5.28
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