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On Tuesday, Jefferies analyst Randal Konik adjusted the price target for Topgolf Callaway Brands (NYSE:MODG) to $10.00, a decrease from the previous target of $13.00. With the stock currently trading at $6.70, down over 53% in the past year, InvestingPro data suggests the stock is trading near its Fair Value. Despite this change, the analyst maintained a Buy rating on the company’s stock. Konik’s evaluation followed Topgolf Callaway’s fourth-quarter earnings, which he noted as solid, outperforming Wall Street’s expectations in terms of revenue and adjusted EBITDA of $463.2 million.
The company’s latest financial results revealed that Topgolf continues to face challenges with softer sales volume (SVS) trends, reflected in the slight revenue decline of 1.06% in the last twelve months to $4.24 billion. However, the opening of new venues and the improvement of venue economics have been beneficial to the segment’s EBITDA. Konik pointed out that while foreign exchange (FX) and tariff-related headwinds are expected to affect fiscal year 2025 outcomes, he remains optimistic about the stock’s value following the anticipated separation of the Topgolf segment. InvestingPro analysis reveals over 10 additional key insights about MODG’s financial health and market position.
Konik’s revised estimates reflect the impact of these headwinds on Topgolf Callaway’s future financial performance. While the company currently shows a current ratio of 1.94, indicating strong short-term liquidity, analysts expect a return to profitability this year. The analyst emphasized the company’s ability to surpass expectations and the positive effects of strategic growth initiatives, which are seen as key drivers for the company’s continued success. Discover comprehensive analysis and detailed financial metrics with a InvestingPro subscription, including exclusive access to the MODG Pro Research Report.
In his commentary, Konik stated, "4Q results were solid and surpassed street ests. on revenue and adj. EBITDA expectations. TG continues to experience weaker SVS trends, while new venues and improving venue economics are aiding EBITDA for the segment. With FX and tariff-related headwinds impacting F’25 results, we reduce our ests, although still see strong value in shares post TG separation. Reit. Buy, PT to $10."
Topgolf Callaway’s stock performance will continue to be monitored by investors as the company navigates through the challenges and opportunities outlined by Jefferies. The firm’s analysis provides a perspective on the potential financial trajectory of Topgolf Callaway as it moves forward with its business strategy.
In other recent news, Topgolf Callaway Brands reported its fourth-quarter 2024 financial results, exceeding analysts’ expectations. The company achieved an earnings per share (EPS) of -0.33, surpassing the forecast of -0.38, while revenue reached $924 million, beating the anticipated $888.83 million. This performance reflects a 3% year-over-year revenue increase and a significant 45% rise in adjusted EBITDA to $101 million. Looking ahead, Topgolf Callaway has provided full-year 2025 revenue guidance between $4.0 billion and $4.185 billion, with adjusted EBITDA expected to range from $415 million to $505 million. The company is also planning to separate its Topgolf business in the second half of 2025. Additionally, analysts have noted the company’s challenges, such as foreign exchange headwinds and softness in the apparel market, which could impact future sales. Despite these challenges, strategic initiatives, including new product launches and operational improvements, are underway to drive performance.
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