Market Overview

Callaway Is The Top Golf Brand In The World, But Has Room To Grow

Callaway Is The Top Golf Brand In The World, But Has Room To Grow

Callaway Golf Co (NYSE: ELY) is the world's most recognizable golf brand, but that doesn't necessarily make it an attractive investment with huge upside, analysts at Cowen said.

Cowen's John Kernan initiates coverage of Callaway's stock with a Market Perform rating and $14 price target as the golf business has shown moderate growth and extremely cyclical profitability. In fact, the company's operating margin peaked in fiscal 2007 at 9 percent and management's strategy of product innovation, customization and improving inventory management will only drive an operating margin expansion of 150 basis points to 7 percent in fiscal 2019.

Topgolf Exposure

Callaway owns a 15 percent stake in Topgolf, a golf concept that combines the game with entertainment, nightlife, food and alcohol. As such, exposure to the non-traditional aspect of the sport does provide Callaway's investors with a potential valuable option in Callaway's stock.

In fact, the analyst is expecting Topgolf to consist of up to 100 locations and reach $1.6 billion in peak sales versus $500 million in fiscal 2016. This would value the privately-held company as high as $4 billion, which naturally gives Callaway investors "upside potential to one of the fastest growing, experience-oriented companies in the U.S."

Bottom line, Callaway's stock is already trading at a nine-year high and up 16 percent in 2017 alone. A $14 price target implies a 32x P/E multiple and 14x EV/EBITDA, which compares to the current stock price that trades at a 30x P/E multiple and 13x EV/EBITDA multiple.

See Also:

Acushnet Vs. Costco: Titleist Is Seeing An Unusual Competitor In Golf

All The Sell-Side Sentiment Following Acushnet's Titleist IPO

Latest Ratings for ELY

Nov 2019MaintainsOverweight
Sep 2019UpgradesMarket PerformOutperform
Aug 2019UpgradesEqual-WeightOverweight

View More Analyst Ratings for ELY
View the Latest Analyst Ratings

Posted-In: Cowen GolfAnalyst Color Price Target Initiation Sports Analyst Ratings General Best of Benzinga


Related Articles (ELY)

View Comments and Join the Discussion!

Latest Ratings

TORCCantor FitzgeraldDowngrades3.0
CIDMCanaccord GenuityMaintains1.5
TDGCanaccord GenuityMaintains620.0
DLPNCanaccord GenuityMaintains1.6
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

2 Longs And 2 Shorts To Watch

Benzinga Hosts Fintech's Future With Venture Firm Village Capital