Jefferies analyst Randal Konik reiterated a Buy rating on Topgolf Callaway Brands today and set a price target of $11.00.
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Randal Konik has given his Buy rating due to a combination of factors including Topgolf Callaway Brands’ strategic move to sell a 60% stake in its Topgolf and Toptracer business, which is valued at approximately $1.1 billion. This transaction is expected to generate around $770 million in net proceeds, providing the company with significant flexibility to reduce debt, reinvest in its core brands, and return capital to shareholders. The decision to retain a 40% stake in Topgolf allows the company to benefit from future growth without the operational complexities.
Moreover, the rebranding to Callaway Golf Company and the change of ticker to CALY reflect a clear focus on their core golf equipment and active lifestyle platform. This strategic clarity is expected to help the company capitalize on favorable industry trends and demographic shifts. The valuation aligns with previous assumptions and highlights the strength of the Topgolf asset. Overall, the transaction is seen as a positive step towards simplification and value creation, reinforcing the Buy rating with substantial upside potential as the company executes its focused strategy.