Market Overview

Leggett & Platt Notches Sell-Side Upgrade: Stifel Projects Upcoming Inflection Point

Leggett & Platt Notches Sell-Side Upgrade: Stifel Projects Upcoming Inflection Point

Manufacturer Leggett & Platt, Inc. (NYSE: LEG) failed to meet estimates when it reported first-quarter earnings April 26.

The Analyst

Stifel's John Baugh upgraded Leggett & Platt from Hold to Buy and increased the price target from $48 to $50.

The Thesis

The Missouri-based company is nearing an inflection point in its top-line growth and margins, Baugh said in the upgrade note. (See the analyst's track record here.) 

"This, combined with a below historical average valuation for the stock, creates an attractive entry point," the analyst said. 

Baugh expects improvement in volumes as the company's two largest end markets — bedding and automotive — improve in the second half of 2018.

The possibility of a tariff on imported foam products could be catalyst for Leggett & Platt, Baugh said.  

Rising steel prices had a negative impact on the company's margins, but this could change due to the spread between scrap (Leggett's cost) and rod (end products) rising meaningfully year-to-date, the analyst said. This represents "a very nice opportunity" for the company to realize margin and profit improvements, he said. 

The difficult volume and margin backdrop over the past quarters pressured the stock, which is now trading at 10 times Baugh's 2018 EBITDA estimate and 15 times his 2018 EPS estimate. Its three-year average is 11 times and 18.8 times, respectively. The stock has typically traded more or less at a similar valuation to the S&P 500, but is now trading at roughly a 10-percent discount, Baugh said. 

Price Action

Leggett & Platt shares opened Thursday's session at $43, but it failed to maintain its gains and was trading at $41.24 at the time of publication, down 1.83 percent. 

Related Links:

Earnings Scheduled For April 26, 2018

Benzinga's Top Upgrades, Downgrades For May 31, 2018

Latest Ratings for LEG

Jul 2019DowngradesOutperformMarket Perform
Oct 2018DowngradesStrong BuyOutperform
May 2018UpgradesHoldBuy

View More Analyst Ratings for LEG
View the Latest Analyst Ratings

Posted-In: John Baugh StifelAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (LEG)

View Comments and Join the Discussion!

Latest Ratings

IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

How Deutsche Bank's Performance Has Ranked Since The Fed Began Controlling Hiring, Risk-Taking

Mid-Afternoon Market Update: J.Jill Climbs On Earnings Beat; Scpharmaceuticals Shares Fall