Tempur Sealy International's (TPX) acquisition of Mattress Firm could generate significantly more synergies than the initially estimated $100 million, Wedbush Securities said in a Monday note.
The company completed its $5 billion acquisition of Mattress Firm Group last week and hosted an investor call on Thursday.
While Tempur did not explicitly reiterate its $100 million synergy goal, Wedbush said it sees substantial synergy opportunities in advertising, brand awareness, product innovation, and streamlining the consumer purchasing process.
Wedbush also noted that about 75% of Mattress Firm's store slots do not have long-term commitments with any brand, leaving more room for the merged company to grow its balance of shares.
Tempur anticipates capturing most synergies in years 2 and 3, a faster timeline than its initial four-year outlook.
Wedbush believes total synergies could be 2-3 times higher than the original forecast and expects the company to revise its projections later this year. Tempur plans to provide more financial details when it reports Q4 earnings on Feb. 20.
Wedbush Securities reiterated its outperform rating and $80 price target on Tempur Sealy International.
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