UBS raises Somnigroup PT to $91 from $84, maintains Buy rating.

UBS raises Somnigroup PT to $91 from $84, maintains Buy rating.

UBS has raised its price target for Somnigroup International Inc. (SGI) to $91 from $84, while maintaining a Buy rating. The move comes after the company reported its Q2 2025 earnings, which showed a slight beat on earnings per share (EPS) but met revenue forecasts. The stock dipped 2.42% in pre-market trading, reflecting investor concerns despite the earnings beat [2].

Somnigroup's adjusted EPS of $0.53 surpassed the forecast of $0.52, while revenue for the quarter was $1.9 billion, aligning with expectations. The company's stock trades at a premium valuation with a P/E ratio of 47.49x, significantly above industry averages [2]. The company launched a major product, the Sealy Posturepedic collection, and expects synergy initiatives to save $100 million annually.

Despite the EPS beat, Somnigroup's stock price fell 2.42% in pre-market trading to $72.74. The decline comes after a previous close of $73.64 and is attributed to broader market concerns and the company's cautious outlook for the remainder of 2025. The stock trades near its 52-week high of $75.69, having delivered an impressive 55.57% return over the past year [2].

UBS noted that Somnigroup's performance has been robust, with net sales increasing by 53% year-over-year to $1.9 billion. The company continues to outperform its competitors by expanding its international sales for the ninth consecutive quarter. Despite a challenging market environment, particularly in North America and international markets, Somnigroup remains the largest advertiser in the bedding industry, which has helped maintain its competitive edge [2].

The company provided guidance for 2025, projecting adjusted EPS between $2.40 and $2.70 and a sales midpoint of $7.4 billion. The company expects gross margins slightly above 44% and adjusted EBITDA of $1.27 billion, with capital expenditures around $200 million. These projections reflect cautious optimism amidst market challenges [2].

UBS maintains a bullish outlook on Somnigroup, with a "Strong Buy" recommendation and price targets ranging from $60 to $90. The company's performance has addressed investor concerns about growth and profitability in the bedding industry [2].

References:
[1] https://ca.investing.com/news/transcripts/earnings-call-transcript-somnigroup-beats-eps-forecast-stock-dips-post-q2-2025-93CH-4177573
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-somnigroup-beats-eps-forecast-stock-dips-post-q2-2025-93CH-4177573