Topgolf Callaway Brands: Hold Rating Amid Mixed Performance and Uncertain Outlook

In a report released yesterday, Alexander Perry from Bank of America Securities reiterated a Hold rating on Topgolf Callaway Brands (MODG – Research Report), with a price target of $9.00.

Alexander Perry has given his Hold rating due to a combination of factors influencing Topgolf Callaway Brands. The company’s first-quarter EBITDA exceeded expectations, primarily due to improved margins in golf equipment and a reduction in corporate SG&A expenses. However, the same venue sales for Topgolf were down by 12%, aligning with initial estimates, which indicates ongoing challenges in this segment.
Despite some positive developments, such as increased walk-in traffic driven by pricing changes, the outlook for corporate events remains weak, with a notable decline in bookings. Additionally, the company has adjusted its EBITDA forecasts downward for the second quarter, reflecting a more cautious stance on future performance. The anticipated spin-off of Topgolf has also been delayed, adding further uncertainty to the company’s future prospects. These factors collectively support the decision to maintain a Hold rating, with a price objective of $9.