03:35 PM EST, 03/07/2024 (MT Newswires) -- Tempur Sealy International ( TPX ) faces a "formidable" bedding rival after Ashley Home's acquisition of Resident Homes, UBS Securities said Wednesday in a note.

The combined company enhances the multi-branded retail presence and can "drive significant mindshare and consumer interest in the future," UBS said.

Still, Tempur "remains well positioned to defend itself as the industry lead," and the Ashley Home's deal improves the prospects for a Tempur buyout of Mattress Firm, which "would be a positive catalyst for Tempur shares," UBS said.

The presence of Tempur's brands in Ashley stores gives the company some negotiating power and "leverage to manage the impact" of the Resident Homes buyout, UBS said.

The transaction probably won't have "a meaningful impact" on Tempur's highest profit brands because of limited overlap with Resident's brands on price points, UBS said.

UBS reiterated its buy rating on Tempur shares and kept the price target at $63.

Tempur shares rose 0.8% in recent Thursday trading.

Price: 55.32, Change: +0.45, Percent Change: +0.82