BofA Securities increased its price target for Somnigroup International to $81 from $78, maintaining a 'buy' recommendation after the company’s acquisition of Leggett & Platt. The adjustment reflects revised earnings estimates and projected cost savings from the deal.
The new target is based on 21 times 2027 earnings per share, down from a prior multiple of 23 times, incorporating Leggett’s contribution. BofA also raised its EPS forecasts for 2026, 2027 and 2028 by 3%, 13% and 13%, respectively, following the transaction. Somnigroup’s management separately lifted its fiscal 2026 EPS guidance by $0.10, though it kept the long-term 2028 target of $5.15 intact amid a slower-than-expected mattress market recovery.
The acquisition, valued at 6.2 times Leggett’s EBITDA before synergies, is expected to generate $600 million in net cost savings, exceeding the paid premium by $200 million to $300 million. The deal is projected to reduce Somnigroup’s leverage from 3.2 times net debt-to-EBITDA to 3.0 times, with completion targeted for the end of the third quarter.
Somnigroup reported adjusted earnings of $0.58 per share for the second quarter, beating the consensus estimate of $0.57 and rising 9% year-over-year. Revenue declined 3% to $1.82 billion, missing expectations of $1.88 billion, as U.S. mattress unit volumes softened. First-half operating cash flow reached $236 million, with free cash flow at $182 million.
S&P Global Ratings upgraded Somnigroup’s credit rating from 'BB' to 'BB+' in June, coinciding with a reduction in leverage to 3.5 times as of June 30. The company’s full-year adjusted EPS guidance remains unchanged at $2.85 to $3.15.
