Keybanc: Tempur Sealy's Upside Continues On

In a report published Tuesday, KeyBanc Capital Markets analyst Bradley B Thomas maintained an Overweight rating on

, while raising the price target from $69 to $75. Market checks suggested that Tempur Sealy's North American trends remain strong in view of the benefits from its new hybrid line - Tempur Flex. "Based on our conversations, we believe TPX is gaining slots on selling floors and that the Flex line has overall been additive (with minimal cannibalization of TPX's legacy products)," analyst Bradley Thomas wrote. Tempur Sealy's new Psoturepedic models, rolled out ahead of Memorial Day, have also been received well. Thomas believes that the company is poised to benefit from lower input prices and report robust 2H15 results. "We estimate every 10% reduction in chemical prices could add as much as $0.30 to annualized EPS, while every 10% reduction in steel prices can add up to $0.20 to annualized EPS," Thomas added. The strong trends witnessed during the Memorial Day weekend have continued through June. In the report KeyBanc Capital Markets noted also that the benefits from low input prices have not been included in the company's guidance and thus there is a possibility of an upside.