KeyBanc has maintained its Overweight recommendation on Somnigroup (NYSE: SGI), setting a 12-month target price of $105.00, according to a research note published on Tuesday. The firm described its stance as "incrementally positive," pointing to Somnigroup's capacity to capture additional market share and the prospective gains from integrating MFRM.
InvestingPro data included in the research snapshot shows SGI carrying a strong analyst consensus recommendation of 1.38. The company is scheduled to release its next quarterly results in 21 days on February 17.
KeyBanc's outlook also highlights potential advantages tied to Somnigroup's unsolicited all-stock proposal to acquire Leggett & Platt - identified in the research as LEG - though that proposal remains non-binding, with any exchange ratio subject to determination and contingent on due diligence.
On valuation, the note contrasts current market prices with KeyBanc's earnings estimates. Using SGI's most recent closing price of $92.71, the stock trades at 34.2 times KeyBanc's 2025 earnings-per-share estimate of $2.71 and 28.1 times its 2026 estimate of $3.30. These forward P/E multiples sit well above the 10-year average forward P/E of 16 times, a range the firm reports has historically spanned from 4 to 36 times.
InvestingPro flags that SGI's current P/E ratio is 58.76 and includes two ProTips calling out that the company is "Trading at a high earnings multiple" and "Trading at a high EBITDA valuation multiple." On an enterprise-value-to-EBITDA basis, KeyBanc's calculations place SGI at 18.4 times 2025 EBITDA estimates and 16.2 times 2026 EBITDA projections, compared with a 10-year EV/EBITDA average of 11 times and a historical range of 5 to 18 times.
KeyBanc's $105 target equates to roughly 32 times its 2026 EPS estimate for Somnigroup. The firm also notes that the stock currently trades at an enterprise-value-to-sales multiple of 3.0 times its 2026 sales estimate, versus a 10-year average of 1.9 times.
InvestingPro's Fair Value assessment is cited in the research as indicating that SGI appears significantly overvalued even after a strong run-up in the share price - the research notes a 56.7% price return for SGI over the past year. The firm reminds readers that additional ProTips and deeper analysis are available in SGI's Pro Research Report through an InvestingPro subscription.
Other sell-side views referenced alongside KeyBanc's note include UBS, which is reported to maintain a Buy rating with a $110 price target and projects EPS accretion in 2026 and 2027. Piper Sandler is mentioned as including Somnigroup among retail stocks with strong growth potential for 2026, grouping the company with other names the firm considers well positioned in that calendar year.
KeyBanc highlighted expectations for Somnigroup to deliver EPS growth of more than 20% in the coming years, attributing that projection to market-share gains and operational optimizations. The research also flags industry recovery prospects as a positive backdrop for the company's outlook.
Summarizing the backdrop, the research places Somnigroup at the intersection of M&A opportunity, operational improvement and stretched valuation multiples. The proposed acquisition of Leggett & Platt remains non-binding and contingent on due diligence, creating a material conditional element to any strategic upside tied to the deal.
With earnings due in 21 days, KeyBanc's reiteration underscores both growth potential and valuation risk as Somnigroup navigates integration of MFRM, possible acquisition activity and evolving industry dynamics.