In a report released today, Rafe Jadrosich from Bank of America Securities reiterated a Buy rating on Somnigroup International, with a price target of $101.00.
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Rafe Jadrosich has given his Buy rating due to a combination of factors related to Somnigroup International’s strategic acquisition proposal of Leggett & Platt. The proposed acquisition is expected to be significantly accretive to SGI’s earnings, even before considering potential synergies. This move aligns well with SGI’s strategy to enhance its position as a leading vertically integrated player in the global mattress market.
Despite potential regulatory hurdles and the need for LEG’s acceptance of the offer, the acquisition is seen as a positive step due to LEG’s critical role as a supplier in the bedding industry. The deal is anticipated to improve SGI’s financial leverage and could lead to further earnings accretion if synergies are realized. Additionally, strong sales trends in the mattress industry, as evidenced by recent Black Friday performance, further support the positive outlook for SGI’s growth prospects.