Stock Watch
Select Comfort: Sales Waking Up
A positive quarterly announcement and an analyst upgrade awakened investors to this mattress maker.
January 11, 2005
Since Monday's close, the stock has risen 13%. But analysts at Piper Jaffray think it can go higher. The firm raised its price target from $17.50 to $23.
Select Comfort manufactures and sells made-to-order specialty mattresses, a business Piper Jaffray says has solid potential for long-term sales and earnings growth. Among the company's products are adjustable-firmness beds sold under the Sleep Number label.
Piper Jaffray says the company's sales trends should improve this year beginning particularly in the second quarter. Contributing to the growth, analysts say, will be the reintroduction of the company's midprice 4000 model Sleep Number bed to several of its stores over the next few months -- a "very important step in reinvigorating same-store unit sales," according to analysts.Piper Jaffray says that local and national advertising efforts should also contribute to sales volume through increased brand awareness.
The investment firm raised its 2005 earnings per share estimate by 5 cents, to $1.02. Analysts also note that the debt-free company has a "very strong balance sheet."
At $19, Select Comfort trades at 20 times the 98 cents per share that analysts, on average, believe the company will earn in 2005.
--Lisa Dixon
