Tempur-Pedic and Select Comfort Gain on Mattress Growth
Tempur-Pedic, a luxury mattress maker based in Lexington, Kentucky, rose 4 percent to $48.97 at the close in New York. Select Comfort, the maker of Sleep Number beds, advanced 5.5 percent to $28.04, the biggest gain since Dec. 20.
Wholesale mattress sales rose 15 percent in April from a year earlier, compared with a 4 percent gain in March, Peter Keith, an analyst with Piper Jaffray in New York, wrote in a note to investors today, citing data from the International Sleep Products Association.
“The strong April number validates that industry sales trends continue to be strong,” Keith said. “The mattress industry cycle remains intact and this implies strong results early in the quarter.”
Keith has an overweight recommendation on Minneapolis-based Select Comfort and Tempur-Pedic, the equivalent of a buy rating.
Both companies have been increasing revenue as the U.S. housing market recovers. Tempur-Pedic boosted sales 28 percent to $1.4 billion last year while Select Comfort’s revenue rose 23 percent to $743.2 million.
Mattress sales gained as the U.S. housing market improved last month. Housing starts rose 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace, the Commerce Department said last week. Construction of single-family houses climbed 2.3 percent in April to a three-month high while work on multifamily homes, such as townhouses and apartment buildings, increased 3.2 percent.
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