William Blair analyst Phillip Blee has maintained their bullish stance on SGI stock, giving a Buy rating on November 13.
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Phillip Blee has given his Buy rating due to a combination of factors surrounding Somnigroup International’s strategic acquisition proposal for Leggett & Platt. The proposed all-stock transaction is expected to be accretive to Somnigroup’s earnings per share, with potential benefits from operational synergies and scale efficiencies. This acquisition is seen as a strategic move to enhance Somnigroup’s dominance in the mattress and bedding industry, offering a 17% upside to Leggett & Platt’s shareholders and a 30% premium over its year-to-date average.
Furthermore, the acquisition would allow Somnigroup to further integrate its operations vertically, reducing reliance on third-party suppliers for key components like inner springs and foam. The addition of Leggett’s domestic steel mills is particularly attractive, as it could mitigate risks associated with tariffs and steel price volatility. Despite potential challenges, such as managing multiple integrations simultaneously, Somnigroup’s strategy to maintain business autonomy and leverage its management’s collaborative experience is expected to minimize risks and provide stability.
In another report released on November 13, Piper Sandler also maintained a Buy rating on the stock with a $104.00 price target.