What happened
Shares of mattress company Sleep Number (SNBR -0.35%) popped on Monday morning after an analyst raised their price target on the stock by 22%. As of 12:20 p.m. ET, Sleep Number stock was up 8.2% and is now up by about 88% from the multiyear low it touched a little more than a month ago.
So what
Wedbush analyst Seth Basham is maintaining a neutral rating on Sleep Number stock. But according to MarketScreener, Basham raised his price target from $27 per share to $33 per share, reportedly citing his belief that sales and profits will both be better than expected.
Sleep Number stock now trades near Basham's updated price target. But that doesn't necessarily mean it's at the right level. Where it goes from here will depend on business updates and market sentiment.
Now what
When Sleep Number reported its first-quarter results, management gave full-year guidance that reflected market headwinds and significant uncertainty. Regarding headwinds, management expects sales to decline in 2023 compared to 2022. And regarding uncertainty, it also expects to report full-year earnings per share between $1.50 and $2. That's a really wide range, which suggests there are plenty of moving pieces in the forecast.
If Basham is right and sales are tracking higher than projections, then perhaps Sleep Number will earn profits toward the higher end of management's guidance range. If so, then the stock is relatively inexpensive right now.
Investors will know better when Sleep Number reports financial results for the second quarter on July 27.
