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Sector Snap: Mattress Companies rise

NEW YORK (AP) -- Shares of Mattress companies rose Wednesday on investor optimism about Mattress Firm Holding Corp.'s prospects for the current year.

Mattress Firm on Tuesday reported a steep drop in fourth-quarter net income, but forecast solid result for fiscal 2013, helped by newly acquired stores. The company's shares rose more than 10 percent Wednesday.

The Houston company bought Factor Mattress & Water Bed Outlet of Charlotte Inc. for $11.4 million in a deal that closed in December. The company is in the process of rebranding the 27 former Mattress Source stores owned by the company as Mattress Firm stores.

Mattress Firm President and CEO Steve Stagner said fiscal 2012 was a record year for the company and with the integration of the acquired stores substantially complete, it expects to make gains in the current year.

The company projected adjusted earnings of $1.90 to $1.98 per share on revenue between $1.24 billion and $1.25 billion. Analysts expected a profit of $1.96 per share on $1.21 billion in revenue.

Raymond James analyst Budd Bugatch said the outlook was better than he expected it would be and boosted his rating for Mattress Firm stock to "Outperform" from "Market Perform." He added that he's also happy that the company plans to focus on integrating the acquisitions it's already made, rather than making additional ones, at least for a while.

KeyBanc analyst Bradley Thomas backed his "Buy" rating for Mattress Firm and boosted his price target by $3 to $37, saying that he's optimistic that the company's guidance will turn out to be conservative. He added that he expects the company's sales figures to pick up as the year progresses and comparisons get easier.

In afternoon trading, Mattress Firm shares rose $3.20, or 10.3 percent, to $34.22 after peaking at $34.77 earlier in the session. Over the past 52 weeks, the shares have traded between $22.62 and $48.18. The shares have regained about 51 percent since hitting that low point on Dec. 10.

Elsewhere in the sector, Select Comfort Corp. shares rose 83 cents, or 4.4 percent, to $19.83; and Tempur-Pedic International Inc. rose $3.32, or 7.1 percent, to $50.13.