Jonathan Matuszewski, an analyst from Jefferies, maintained the Hold rating on Somnigroup International. The associated price target is $86.00.
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Jonathan Matuszewski has given his Hold rating due to a combination of factors related to Somnigroup International’s recent strategic moves and current market valuation. The company’s proposal to acquire Leggett & Platt is seen as a step towards greater vertical integration, which could enhance sourcing transparency and cost efficiencies in the supply chain. However, despite these potential long-term benefits, the current trading price of SGI is nearly double its pre-COVID valuation, suggesting that the market has already priced in significant future growth expectations.
Moreover, while the acquisition could diversify SGI’s capabilities beyond bedding, it also introduces exposure to non-core categories, adding a layer of risk. The Hold rating reflects a cautious stance, acknowledging that the current valuation already assumes substantial revenue and cost synergies that may exceed what has been communicated. Thus, while the acquisition could drive earnings growth as demand recovers, the stock’s current price suggests limited immediate upside potential.
Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SGI in relation to earlier this year.