JPMorgan cuts Acushnet Holdings target to $57 from $64

On Wednesday, JPMorgan analyst Kevin Heenan revised the price target for Acushnet Holdings (NYSE:GOLF), the parent company of Titleist golf balls and FootJoy shoes, to $57.00, down from the previous target of $64.00. Despite this adjustment, the firm maintained its Underweight rating on the stock. Currently trading at $67.73, the stock appears to be trading above its Fair Value according to InvestingPro analysis, with analyst targets ranging from $64 to $75. The decision follows Acushnet’s first-quarter adjusted EBITDA report, which showed a marginal decline to $138.9 million compared to the Street’s expectation of $139.2 million.

The company’s core EBIT of $114.5 million was 4% below the consensus, influenced by a year-over-year gross margin decrease of 45 basis points to 47.9%, which fell short of the anticipated 49.4%. This contraction in gross margin was a significant factor, overshadowing the company’s revenues, which only slightly decreased by 0.6% year-over-year, performing better than the Street’s forecast of a 1.4% decline. Acushnet also reported a more favorable operating expense rate of 31.6%, which was below the Street’s projection of 32.3%.

Despite these figures, Acushnet Holdings did not provide updates to its FY25 guidance due to the prevailing macroeconomic uncertainties. The previous guidance from February 27, 2025, anticipated an adjusted EBITDA range of $405-420 million, aligning with the Street’s expectation of $408 million. This forecast was based on a projected yearly sales increase of 1.1-3.2%, slightly below the Street’s prediction of 2.1%, with a slight gross margin expansion expected to be offset by SG&A deleverage. Notably, the guidance did not account for the impact of tariffs.

Looking ahead, Acushnet’s management has set expectations for the first half of 2025. They anticipate sales to rise by low-single digits year-over-year, consistent with their previous outlook and the Street’s projection of a 2.1% increase. InvestingPro analysis reveals the company has maintained dividend payments for 9 consecutive years with a current yield of 1.45%, and has achieved an impressive 8-year streak of dividend increases. For deeper insights into Acushnet’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. However, the adjusted EBITDA is expected to decline by low-single digits year-over-year, which is a slight change from the previous "slightly lower" year-over-year outlook and compares to the Street’s estimate of a 2.0% decrease. These projections suggest that the second-quarter revenues could increase by 4.7%, with an EBITDA dollar growth of 7.0% year-over-year, which is marginally higher than the Street’s expectations.

In other recent news, Acushnet Holdings Corp . reported its first-quarter 2025 financial results, surpassing analyst expectations with an earnings per share (EPS) of $1.62, compared to the forecasted $1.32. The company also exceeded revenue forecasts, reporting $703 million against the anticipated $697.38 million. Despite this positive earnings surprise, Acushnet’s stock experienced a premarket decline of 1.4%. The company has not updated its full-year guidance due to ongoing uncertainties related to tariffs. Acushnet is actively working on mitigating tariff impacts, projecting a $75 million gross impact for 2025. The company’s strategic sourcing and pricing actions are expected to offset more than 50% of this impact. Analysts from firms such as Morgan Stanley (NYSE:MS) and Raymond (NSE:RYMD) James have been inquiring about the company’s strategies to handle these tariff challenges. Acushnet remains focused on its core consumer base and has noted strong sales growth in its golf ball and club segments.

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