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Investing.com - Texas Capital Securities initiated coverage on Topgolf Callaway Brands (NYSE:MODG) with a Hold rating and set a price target of $8.00. The stock currently trades at $8.83, with analyst targets ranging from $6.00 to $10.50. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation.
The firm recognizes Topgolf Callaway as one of the leading equipment and apparel designers and manufacturers in the on-course golf segment, positioning the company to benefit from post-pandemic strength in industry participation. With annual revenue of $4.19 billion and a current ratio of 2.12, the company maintains strong liquidity despite challenging market conditions. InvestingPro data reveals 7 additional key insights about MODG’s financial position.
Texas Capital also notes the potential for off-course golfers to transition to on-course play, which could provide additional growth opportunities for the company.
Despite these positive factors, the firm expects Topgolf same-venue sales to remain under pressure heading into 2026, citing both a decline in corporate event spending and broader consumer spending headwinds.
These challenges are expected to limit MODG’s valuation potential through and possibly beyond the company’s planned separation into two standalone entities, according to Texas Capital’s analysis.
In other recent news, Topgolf Callaway Brands Corp. reported a significant earnings surprise for Q1 2025, with earnings per share (EPS) of $0.11, surpassing the anticipated loss of -$0.04. The company’s revenue stood at $1.09 billion, aligning with forecasts but representing a 5% decline from the previous year. Despite the revenue dip, the company maintained its full-year guidance, projecting revenue between $4 billion and $4.185 billion. Additionally, Topgolf Callaway Brands announced the approval of an amended 2022 Incentive Plan, increasing the share pool by 13.5 million shares.
KeyBanc Capital Markets maintained a Sector Weight rating on Topgolf Callaway Brands, noting the company’s financial results exceeded expectations. However, concerns were raised over the soft goods segment, which saw a 12% year-over-year decline in Q1, with expectations for a continued decrease. The company also updated its tariff impact estimate to $25 million, up from a previous $5 million, though this was offset by a $45 million foreign exchange benefit.
Shareholders approved several proposals at the recent annual meeting, including the election of directors and the ratification of Deloitte & Touche LLP as the independent accounting firm. Topgolf Callaway Brands is exploring a potential business separation, which analysts at KeyBanc suggest could unlock significant value. The company is also in the process of selling its Jack Wolfskin brand, aiming to close the transaction by late Q2 or early Q3.
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