Adams Harkness upgraded Tempur-Pedic International (TPX ) to strong buy from buy.
Analyst Mark Rupe says his channel checks reveal continuing strong Tempur-Pedic sales trends and a potentially weakening competitive front for the company. He bases his upgrade of Tempur-Pedic on his belief that business momentum has continued for the company despite ongoing weak industry trends.
He sees Tempur-Pedic shares continuing to move forward as earnings per share estimates are likely to rise in coming months. He notes Tempur-Pedic's 52% third-quarter unit volume growth easily topped the industry's 0.4% unit growth, and Select Comfort's 11% unit growth.
Given the industry's weak October unit showing and Select Comfort's sales warning, Rupe expects Tempur-Pedic to get more market share in the fourth-quarter. He sees 78 cents 2004 earnings per share, and $1.00 2005 earnings per share.