Analyst Sees More Market Share Gains For Tempur Sealy International Inc.

Tempur Sealy International Inc.

will continue to take market share from competing mattress makers, even as its short-term profit margins remain under pressure, an analyst said Tuesday. Bank of America's Denise Chai maintained a Buy rating and $61 target on the Lexington, Kentucky company, saying it will benefit from strong demand for bedding. Profits have been squeezed by manufacturing inefficiencies related to higher-than-expected demand for Sealy products, as well as by costs for an international expansion of the Sealy brand. "We believe it's a 'good problem to have," Chai said of the squeeze. "It reflects strong demand and market share gains." Tempur-Pedic agreed to acquire Sealy Corp for $228.6 million in 2012. Citing recent figures from the International Sleep Products Association, Chai said total industry bedding sales grew 9.3 percent in October to $460 million, versus a 4.3 percent growth rate in October 2013. Units in the West grew 12 percent and sales grew 15 percent in the region. The North Central and South saw unit growth in the mid single digits and sales growth in the high single digits. Volume in the Northeast fell 1 percent, while sales grew 3 percent, Chai said. Tempur-Sealy recently forecast that 2014 revenue would grow 21 percent from a year earlier, to a range of $2.97 billion to $3 billion. http://investor.tempursealy.com/releasedetail.cfm?ReleaseID=879503 Tepur-Sealy traded recently at $56.52 a share, nearly unchanged.