Wake Up To Casper's Potential: Goldman Starts Coverage Of Sleep Company With Buy Rating

Don't sleep on bedding products company Casper Sleep Inc CSPR, Goldman Sachs said Monday.

The Casper Sleep Analyst

Alexandra Walvis initiated coverage of Casper Sleep with a Buy rating and a $16 price target.

The Casper Sleep Thesis

Sleep is big right now. It's a growing branch of the health and wellness market, and as a company that brands itself instead as a "holistic sleep" company, Casper, which sells a range of sleep products from mattresses to full beds to the linens that go on them, can capture some of that interest, Walvis said.

Casper is a not only a unique brand, but also has a solid path to improving profitability through the addition of new business channels, Walvis said.

Also, the price is now right. The company went public in early February, with shares opening above $14. The price is now down below $9.

"While we recognize execution risk and a competitive marketplace, we believe these concerns are more than adequately reflected in shares given depressed valuation, and see upside to shares from current levels," Walvis wrote in a note.

The company is growing through wholesale, which Walvis said could reach nearly a third of sales, up from 20% currently. That's driven by Casper's move to grow through distribution partners like Costco Wholesale Corporation COST and Target Corporation TGT, Walvis said.