Leggett & Platt, Inc. (LEG)

Leggett & Platt, Inc. (LEG) stock fell by 6.29% after a Wall Street analyst reiterated a negative view on the company. Piper Sandler analyst Peter Keith lowered the firm's price target on LEG from $18 to $16 and maintained an Underweight rating, citing increased concerns about the possibility of a dividend cut.

• Analyst's Perspective: Keith's decision to lower the price target was based on a deeper analysis of Leggett & Platt's balance sheet and cash flows. While the previous underweight rating was primarily due to fundamentals with limited risk to the dividend, Keith now believes that the chance of a dividend cut has risen.
• Recent Performance and Outlook: Leggett & Platt's stock decline comes after the company reported weaker-than-expected quarterly results, including a 7% year-over-year decrease in fourth-quarter revenue to just under $1.12 billion. Management attributed this decline to another challenging year for residential end markets, with weak demand for bedding products, furniture, flooring, and textile products. The company also announced a restructuring of its bedding products segment, expecting $20 million to $25 million in restructuring-related expenses in the first half of the year. While this restructuring aims to improve profitability in the long term, analysts like Keith remain cautious about its success and the company's overall outlook.

Leggett & Platt, Inc. (LEG) stock dropped by 8.49% due to the company's extensive restructuring plans. The diversification supplier intends to reduce its bedding operations by up to 15 facilities, alongside restructuring its product strategy. Additionally, the company plans to consolidate select production facilities in home furniture and flooring products to enhance efficiency.

• Anticipated Impact: The restructuring is expected to lead to a $100 million reduction in annual sales, but it aims to generate $40 million to $50 million in annualized earnings before interest and taxes (EBIT). Furthermore, Leggett & Platt expects to receive $60 million to $80 million in cash proceeds from facility sales, with most transactions finalized by the end of 2025.
• Company StrategyThe restructuring seeks to create a more focused and agile organization that aligns products and operations with market needs. It particularly addresses the evolving bedding market and aims to improve long-term prospects. The optimization of the operating footprint aims to reduce complexity and enhance efficiency.