Callaway Golf's Newest 'Big Bertha' Generates Buzz Ahead Of PGA Merchandise Show

Wunderlich’s Rommel Dionisio believes the upcoming launch of the Great Big Bertha Epic drivers by Callaway Golf Co ELY, expected before the PGA Merchandise Show, could be an important catalyst for the stock.

Dionisio maintains a Buy rating on the company, with a price target of $15.

Great Big Bertha Epic Launch

The analyst mentioned recent channel checks suggest Callaway Golf is well positioned to gain market share during 2017, especially in the crucial driver category given the major upcoming product launch, which many retailers believe could be the most important launch for the industry this season.

“Though not yet formally released, Callaway’s major new upcoming top-of-the-line driver for 2017, the Great Big Bertha Epic, is already generating the most pre-season buzz among our retailer contacts of any new golf product for this season,” Dionisio stated.

This line of drivers is expected to feature three models, one of which appears to be slated for use by the world No. 2 player, Rory McIlroy.

Market Share

“In balls, Callaway faces an updated model from that segment’s dominant player, but stands to potentially capture share from the exit of a major competitor,” the analyst went on to say.

In addition, with Nike Inc NKE exiting the golf equipment segment, the competitive pressures, in terms of marketing and endorsement contracts, is expected to decline for Callaway Golf, while also leaving its market share up for grabs.

On the other hand, with the recent bankruptcy of Golfsmith, as well as the expected FX impact due to the strengthening of the U.S. dollar, are expected to be the two main headwinds Callaway Golf is likely to face in 2017.