UPDATE: Stifel Nicolaus Reduces PT to $30 on Tempur-Pedic International, Maintains Buy; Competitive Concerns
Stifel Nicolaus reiterates its Buy rating on Tempur-Pedic International (NYSE: TPX) and reduces its price target from $89 to $30.
Stifel Nicolaus comments, "The stock has essentially fallen to a level that implies EPS in the $2.00 per share range with a P/E of around 11x. This would equate to an EBIT margin of 15% versus the 23-24% range in recent quarters. Once management adjusts its costs for the lower sales rate, it gives the company considerable competitive leverage to respond if it is willing to accept an EBIT margin this low. Keep in mind that roughly one-third of Tempur's business is outside the U.S. and not subject to the higher competition. We think a 12x P/E multiple on our $2.50 estimate for 2012 is a reasonable short term target price until the dust settles on the strategic or competitive response."
TPX closed at $22.39 on Wednesday.
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