Sleep Number Stock Looks Ripe for Upgrades

SNBR is down over 60% in the past year

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Sleep Number Corporation (NASDAQ:SNBR) is an American manufacturer that makes smart beds, as well as foundations and bedding accessories. On March 14, Sleep Number announced the election of Shelly R. Ibach as Board Chair, effective May 12, following the company’s annual meeting of shareholders. Ibach will continue to serve as Sleep Number’s President and CEO, and will succeed Jean-Michel Valette, who served as Board Chair since May 2010. At last glance SNBR was trading down 7% at $51.71.

Sleep Number stock has decreased about 64%  year-over-year and SNBR is down 63% off of its 52-week high of $150.85 last March. Additionally, shares of SNBR have dropped 32% year-to-date and Sleep Number stock is just off an annual low of $51.47, which it tapped earlier today.

Fundamentally speaking, Sleep Number stock offers an intriguing valuation at forward price-earnings ratio of 9.57 and a price-sales ratio of 0.69. However, the company has an extremely weak balance sheet with $791 million in total debt and just $2.39 million in cash, which is far from ideal. 

Albeit amid light absolute volume, an unwinding of pessimism could bring some overdue bullish sentiment toward the equity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SNBR sports a 10-day put/call volume ratio of 1.23, which ranks higher than 86% of readings from the past 12 months. This is indicative of a healthier-than-usual preference for puts of late. 

The security is also overdue for a round of upgrades. Heading into today, three of the five covering brokerage firms sport a "hold" or worse recommendation.


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