UBS Cuts Price Target on Mattress Firm (MFRM) to $57 Following 2Q15

UBS reiterated a Buy rating on Mattress Firm Holding Corp. (NASDAQ: MFRM), and cut the price target to $57.00 (from $68.00), following the company's 2Q15 earnings results. Analyst Michael Lasser said that MFRM was spread too thin, which exacerbated the challenge of executing in a difficult sector.

Lasser commented, "While the long-term opportunity for MFRM remains the same, the path to capitalizing on this potential seems to be littered with stumbles. We think those create chances to pick up the stock, but we also recognize that the shares probably will not move in a straight line. This quarter, the company put up a decent comp of 2.8% that represented some of its best stacked SSS metrics in the last few quarters. Yet, units remained under pressure (with a -0.5% decline), and all of the growth was driven by a 3.3% increase in AUP. Further, the company saw several sources of margin pressure that seem to be becoming more of a regular part of its structure, such as deleverage from salesperson compensation and pressure from the financing offers. Still, our constructive thesis rests on the belief that there should be margin expansion from the company's growing scale and this should shine through over time."

For an analyst ratings summary and ratings history on Mattress Firm Holding Corp. click here. For more ratings news on Mattress Firm Holding Corp. click here.

Shares of Mattress Firm Holding Corp. closed at $46.24 yesterday.

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