The decrease was seen as a response to a big drop in Tempur-Pedic's outlook.
A gloomy earnings forecast from one of its competitors sent shares of Select Comfort Corp. tumbling more than 20 percent.
Tempur-Pedic, a Lexington, Ky.-based mattress company, announced Wednesday that it would slash its earnings forecast far below Wall Street's estimates. Investors quickly reacted, as Tempur-Pedic's stock plunged 49 percent.
Other mattress companies were caught in the wake, including Mattress Firm Holding Corp., a Houston-based bedding retailer, whose shares declined about 20 percent. Sealy Corp.'s stock fell about 5 percent.
Still, analysts who follow Plymouth-based Select Comfort said they were unmoved by the market's reaction, maintaining their buy ratings on the stock.
"We believe it's just trading in sympathy with Tempur-Pedic," said Joan Storms, an analyst at Wedbush Securities.
Officials of Select Comfort, including newly installed CEO Shelly Ibach, were at a Piper Jaffray investor conference in New York on Wednesday and not available for comment.
Storms noted that Select officials spoke at the conference and maintained the company's previous earnings forecast. The company expects earnings per share of $1.32 to $1.40 this year, up from $1.07 last year, with comparable sales expected to increase at least 15 percent.
Two other analysts also kept their buy ratings for Select Comfort and 12-month target prices of $40 to $41. Select shares have been trading in the mid- to high-20s but closed Wednesday at $20.61. In a research note, Piper Jaffray analyst Peter Keith said he didn't think Select Comfort would be hurt if Temper-Pedic ramped up promotional sales.
Specialty mattress companies like Select Comfort, which makes adjustable-firmness air beds, and Temper-Pedic, which makes premium-priced foam mattresses, have been darlings within the mattress industry. The International Sleep Products Association recently reported that bedding unit sales were up 2 percent in 2011, while the dollar value of shipments increased 10 percent.
Innerspring mattress unit sales rose less than 1 percent, while unit sales of specialty mattresses like Select's increased almost 30 percent.
At the annual shareholders' meeting last week, Ibach said Select Comfort's success is driving overall trends in the specialty mattress market. The company has goals of more than doubling sales to $1.5 billion and boosting operating margin to 15 percent by 2015.
Susan Feyder • 612-673-1723