Ahead Of The Bell: Select Comfort

NEW YORK (AP) — An analyst tagged shares of bed retailer Select Comfort Corp. with a "Buy" rating on Friday, saying that improving consumer spending has boosted mattress sales.

KeyBanc analyst Bradley B. Thomas, who previously did not have a rating on the stock, said Select Comfort's lower-priced models are boosting sales.

The company said earlier this week that same-store sales rose 1 percent in July. Same-store sales measure sales at stores open at least one year.

Select Comfort has closed more than 50 stores, which Thomas said is helping cut costs.

Meanwhile, the company is considering selling a controlling interest to Sterling Partners, which Thomas thinks is a "win-win scenario."

If shareholders approve the offering, the company's balance sheet improves significantly. If the deal is rejected, the company can raise capital at rates much less harmful to earnings per share.

The company's special meeting for shareholders is scheduled for Aug. 27.

Thomas' price target of $4 means he thinks shares have room to rise 40.4 percent from Thursday's closing price of $2.85.

Shares rose 8 cents, or 2.8 percent, to $2.93 in premarket trading.