Callaway Shares Move Lower Despite Q1 Beat; Jack Wolfskin Weakness Comes In Focus

Callaway Golf Co ELY shares are trading down despite the golf club maker's Thursday earnings beat. Here's how two analysts reacted to the print. 

Cowen 

Callaway management was able to raise its outlook within the core golf business, but weakness in the newly acquired Jack Wolfskin business forced a cut to the sales and EBITDA outlook, Cowen analyst John Kernan said in a Friday note. 

Callaway's innovation in golf club manufacturing has been tremendous, with the Epic Flash “seemingly the most technologically advanced set of woods ever made," the analyst said. 

“Ely’s core business continues to reflect favorable consumer reception to its innovations and product cycle despite a flat to +2% outlook for the golf industry as a whole." 

Cowen maintained a Market Perform rating on Callaway with an $18 price target.

KeyBanc Capital Markets 

The "swift lowering of Jack Wolfskin" was not the outcome KeyBanc Capital Markets was expecting, and “while the misstep may leave a black eye until execution is proven, we reiterate our view that fundamentals within Ely’s core golf business and the LT opportunity that Jack affords both remain underappreciated at current levels," analyst Brett Andress said in a Thursday note. 

Execution with Jack Wolfskin is likely the definitive sentiment needle-mover going forward, but the bar has clearly been lowered, de-risking the story amid a fluid global macro backdrop, the analyst said. 

KeyBanc reiterated an Overweight rating with a $23 price target.

Price Action 

Callaway shares were down 7.05 percent at $15.84 at the time of publication Friday. 

Related Links:

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Photo courtesy of Callaway.