UBS initiates Topgolf Callaway Brands stock with Neutral rating

Investing.com - UBS initiated coverage on Topgolf Callaway Brands (NYSE:MODG) with a Neutral rating and a $10.00 price target on Friday. The stock, currently trading at $9.24, has shown strong momentum with a 49% surge over the past six months, according to InvestingPro data.

The investment bank cited concerns about the golf business’s growth trajectory for the coming year, while noting that Topgolf’s same-store growth remains challenging. These concerns align with InvestingPro analysis, which shows analysts anticipating a sales decline this year, despite the company maintaining strong liquidity with a current ratio of 1.85.

UBS acknowledged that separating Topgolf from the core golf business could create a clearer story for each division, especially since Topgolf’s same-venue sales declines have been an overhang compared to the more resilient core golf business post-Covid.

However, the firm believes potential dis-synergies and a more subdued growth profile for the golf business might limit multiple expansion opportunities.

The $10 price target is based on a 7-8x EV/EBITDA multiple, which breaks down to approximately 6-7x for Topgolf and 10-12x for the core business, including estimated dis-synergies of $30 million.

In other recent news, Topgolf Callaway Brands reported its second-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.24, significantly higher than the forecasted $0.02. The company also exceeded revenue projections, reporting $1.11 billion compared to the anticipated $1.09 billion. These results highlight strong financial performance in the recent quarter. In another development, Topgolf Callaway Brands announced that director Scott M. Marimow resigned from the company’s board. The resignation was not due to any disagreement with the company’s operations, policies, or practices. Following Marimow’s departure, the board decided to reduce its size from 11 members to 10 members. These recent developments are part of the ongoing changes within the company.

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