Looming Serta Simmons bankruptcy positive for Tempur Sealy, says Wedbush

Commenting on Bloomberg’s report saying that Serta Simmons Bedding is preparing for Chapter 11 bankruptcy protection, Wedbush analyst Seth Basham says he views this positively for Tempur Sealy. Serta Simmons Beddinghas been struggling in recent years under a mountain of debt and operational challenges, leading to share losses to competitors including Tempur, Basham adds. While many have been anticipating bankruptcy or debt restructuring for Serta Simmons Bedding given its $2B in bonds that mature in 2023 and trade at pennies on the dollar, this event is meaningful for Tempur, the analyst argues. Basham points out that the first-lien debt-holders could gain control of Serta Simmons Bedding from private equity owner Advent, which could result in more material changes beyond recent downsizing and management changes. Further, retrenchment to focus on profitable lines of business could open the door for Tempur to accelerate market share gains in 2023, he adds. The analyst has an Outperform rating on Tempur Sealy with a price target of $30.