NEW YORK (TheStreet) -- Shares of Tempur Sealy (TPX) - Get Report were plunging 21.42% to $58.50 in pre-market trading on Wednesday as the mattress company late yesterday said it expects fiscal 2016 third-quarter sales to be below its prior estimates.
Tempur Sealy also forecast a full-year sales decline of 1% to 3% year-over-year.
The Lexington, KY-based company reduced its full-year outlook for adjusted EBITDA to be between $500 million and $525 million vs. its prior estimate of $525 million to $550 million.
Longbow subsequently downgraded Tempur Sealy stock to "neutral" from "buy," according to TheFly.
The firm said the company "surprised investors" when it announced it predicts negative sales, especially following one of its better performances in the fiscal 2016 second quarter.
Longbow added that it expects Tempur Sealy shares to be range bound until demand trends improve, and believes investors may stay on the sidelines for the time being.
Additionally, Piper Jaffray cut its price target to $63 from $84, calling the updated outlook "terrible," TheFly reports.
The firm maintained its "overweight" rating on the stock.
Piper Jaffray noted that the revised guidance implies North American sales are slumping between 4% and 9% for 2016, which the firm said isn't likely to carry over into 2017.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
TheStreet Ratings team rates Tempur Sealy as a Buy with a ratings score of B-. This is driven by some important positives, which it believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks it covers. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
You can view the full analysis from the report here: TPX