Shares of Lexington-based mattress maker Tempur-Pedic tumbled Friday, a day after the company reported record first-quarter sales and earnings.
The company's stock dropped $17.23, or more than 20 percent, to close at $66.52.
"We thought we would see better results from Tempur-Pedic than we did," said Brad Thomas, an analyst at KeyBanc Capital Markets, in explaining the likely cause of the drop. "We're surprised that the reaction to the stock has been as violent today as it was, and we think this is going to be a good entry point for investors."
Company officials, as a general practice, decline to comment on stock price.
For the first quarter, the company saw sales increase 18 percent to $384.4 million.
"We're off to a good start to the year," CEO Mark Sarvary told analysts during the company's Thursday evening conference call.
Sarvary emphasized the company is significantly increasing its advertising in 2012 to drive sales even higher. He noted advertising was a record $47 million in the quarter.
That's already translated to a 50 percent increase in visits to Tempur-Pedic's Web site, Chief Financial Officer Dale Williams told the Herald-Leader.
"What that says is the advertising is getting consumers' attention, they're checking it out and they're doing some research," Williams said. "In time, that should convert to revenue."
Sarvary also said Tempur-Pedic is receiving good feedback from retailers to its new Simplicity product line that is priced at $1,499 and enters the company into a lower-priced portion of the market.
"While it remains very early, we're pleased with the performance we've seen so far," he said.
Behind the quarterly growth was improved performance in North America and abroad. Sales increased here 17 percent, while international sales rose 19 percent.
Sales of mattresses jumped 18 percent globally. Mattress-sales growth in North America was 15 percent compared with a 26 percent jump internationally.
Sales of pillows increased 20 percent globally, with a 22 percent jump in North America and 17 percent internationally.
The company earned $56.2 million in the quarter, up 16 percent from $48.3 million during the same period a year earlier. Earnings per share were 86 cents in the quarter, up from 68 cents a year ago.
The strong earnings come after Tempur-Pedic announced plans last year to expand its headquarters operations in Lexington and add 65 jobs during the next five years. Construction on its new headquarters at the University of Kentucky's Coldstream Research Campus is ahead of schedule, Williams said.
"We're excited and looking forward to late fall when we'll start moving in," he said.