Ahead of the Bell: SunTrust analyst downgrades Sealy

NEW YORK—A SunTrust Robinson Humphrey analyst downgraded shares of Sealy Corp. on Monday, saying the mattress company has suffered from lower earnings and will see slower demand in the coming year.

Keith Hughes cut Sealy to "Neutral" from "Buy" in a note to investors Monday. Hughes said the Trinity, N.C., company has had a "disappointing" year thus far. Earlier this month, Sealy said first-quarter profit fell 34 percent on higher raw materials costs, though it beat analyst estimates.

Hughes said those higher costs, namely for steel and foam, are likely to persist and will be difficult for Sealy to pass on to consumers. The price hikes come as Sealy plans to introduce a new line of its Posturepedic mattresses, which he said will likely suffer from slower demand as the product hits the market later this year.

The analyst lowered his 2008 earnings outlook to 48 cents per share from 62 cents per share. Analysts polled by Thomson Financial expect full-year earnings of 63 cents per share, on average.

Shares of Sealy closed at $6.82 on Friday. The stock has fallen about 60 percent from an annual high of $17.18 last April.