Callaway Golf On An Operational Roll, Analyst Says Topgolf Growth Could Accelerate

The increase in rounds of golf being played in the U.S. and the return of indoor golf at an entertainment destination lead to a bullish call on an industry leader.

The Callaway Golf Analyst: Compass Point analyst Casey Alexander upgraded shares of Callaway Golf Co ELY from Neutral to Buy and maintained a $33 price target.

The Callaway Golf Takeaways: Alexander increases the rating on the golf company due to several items.

“Callaway Golf is on an operational roll, with tremendous momentum in the core golf business and the Topgolf acquisition,” Alexander wrote in a note.

The merger with Topgolf, an increased EV/EBITDA multiple and revenue growth were reasons for Alexander to recently increase the price target in September and change the rating to Buy.

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Another catalyst is the company’s supply chain changes shifting production around to help lessen the impact on revenue from any disruptions.

Topgolf has been mentioned as an outperformer by the company in the third quarter of the current fiscal year. Improved financials from the company could lead to Callaway funding Topgolf growth faster than expected.

“The shares have now reached an entry point with better risk-adjusted rate of return," the analyst noted.

ELY Price Action: The stock closed up 3% at $27.43. Shares of the golf company are up 34% in the last year.