Titleist Holds An Industry-Leading Share Of The Golf Market

D.A. Davidson’s Andrew Burns believes Acushnet Holdings Corp GOLF ("Titleist")* is well positioned to sustain solid free cash flow and a profitable growth trajectory.

Burns initiated coverage of the company with a Buy rating and price target of $23.

Well Positioned

“Product innovation, a shift towards customization, category extensions, and e-commerce growth will contribute to Acushnet outpacing the overall industry in the years ahead,” the analyst mentioned.

With annual free cash flow of more than $100 million by 2018, Burns expects the company’s cash deployment activities to further enhance its robust fundamental position.

With “some of the most recognizable brands in the game,” Acushnet has been able to establish itself as the most profitable and largest golf company in the world.

“Anchored by its Golf Ball segment, the Titleist brand maintains both the #1 market share position as well as premium positioning,” the analyst pointed out.

The company held its IPO on October 28, although 53 percent ownership stake still lies with Fila.

Consistent Growth

Although golf participation appears to have been in decline over the last decade, Burns believes media reports of the demise of golf are largely exaggerated.

“The core avid golfer remains relatively stable, top brands are consolidating market share, the retail landscape is undergoing a much-needed consolidation, and inventory/ pricing dynamics are the strongest they've been in recent memory,” the analyst noted.

Despite the decline in total participation, as well as the number of golf courses, Acushnet has been able to generation 6 percent revenue and 12 percent adjusted EBITDA CAGR (constant currency) during 2011-2015.