A Healthy Environment For Titleist Portfolio

Acushnet Holdings Corp GOLF reported its Q3 results at the high end of the preliminary guidance range.

D.A. Davidson’s Andrew Burns reiterated a Buy rating on the company, with a price target of $23.

Q3 Results

Acushnet Holdings reported its Q3 revenue at $332.4 million, with adjusted EBITDA of $27 million and GAAP EPS of $(0.08), with the revenue and adjusted EBITDA ahead of the estimates and an in-line EPS.

Revenue increased 3.9 percent year-over-year, driven by growth in Titleist Golf Clubs, FootJoy and Titleist Golf Gear, partly offset by a decline in golf balls.

However, the gross margin contracted to 48.7 percent, driven by FX contract losses, while SG&A declined 3.6 percent on a reported basis.

Total opex also declined 2.5 percent due to increased bad debt expense and one-time IPO costs.

Future Growth

“We are pleased with GOLF's first call as a public company, which highlighted the long-term strategic vision and positive fundamental outlook for the golf industry overall,” Burns stated.

Acushnet Holdings’ product offering continue to be strong, the analyst noted, given that both the updated Pro VI and new 917 metal woods have been well received.

“The Golfsmith restructuring will continue to modestly impact results through 1Q17, but we agree with management's assessment that demand will migrate to other stores and channels,” the analyst went on to say.

Heading into 2017, Burns believes sustained focus on customization and e-commerce growth, as well as the Pro VI launch and continued product innovation are likely to drive revenue growth.

At last check, shares of Acushnet were up 3.78 percent at $20.02.