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Sunday, October 1, 2023

Callaway Emerging from the Rough, Swinging for Upside

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Of all the impacts the COVID-19 pandemic had on society, the shift toward outdoor activities has to be one of the more uplifting ones. In regard to sports, golf has seen a healthy consumer demand surge as of late, and the Callaway Golf Company (ELY) is there to reap the profits. The golf equipment and apparel firm reported earnings Monday evening, beating consensus estimates across nearly every sector. (See Callaway Golf stock charts on TipRanks)

Initiating his coverage on the stock is Rudy Yang of Berenberg Capital Markets, who wrote that Callaway saw year-over-year sales of more than 200%, boosted from golf equipment, softgoods like clothing and apparel, and the sports entertainment subsidiary Topgolf.  

Yang assigned a Buy rating on the stock, and added a price target of $38. This target represents a possible 12-month upside of about 18%.  

Callaway Golf released upbeat earnings results, beating Wall Street expectations on net revenue, adjusted EBITDA, and non-GAAP earnings-per-share.  

While the company is currently being challenged by several supply chain and manufacturing disturbances, Yang is enthused to state that Callaway is successfully navigating those problems in proper stride. Furthermore, the strong sales trends are expected to stay for the foreseeable future, and this revenue should be sufficient to offset the mitigable obstacles.  

In reference to risks, due to Callaway’s direct existential vulnerability to consumer interest in golf as a sport, Yang added that “consumer discretionary spending widely affects companies with golf exposure, as spending declines in line with economic cycles.” He also surmised that regulatory issues regarding import taxes on Chinese trade could put a dent in Callaway’s profits.  

On TipRanks, ELY has an analyst rating consensus of Strong Buy, based on 6 Buy ratings and 1 Hold rating. The average Callaway Golf Company price target is $38.43, suggesting a possible 12-month upside of 22.66%.  These numbers are accurate as of intraday Tuesday trading at 10am EST.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment. 

The post Callaway Emerging from the Rough, Swinging for Upside appeared first on TipRanks Financial Blog.

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