Shares of
Topgolf Callaway Brands
were falling sharply on Thursday after the golf company slashed its guidance.
Topgolf (ticker: MODG) stock was down 21% to $9.81 in premarket trading.
When it reported third-quarter earnings after the close Wednesday, the company said for full-year 2023 consolidated net revenue will be between $4.24 billion and $4.26 billion. It also cut its outlook adjusted earnings per share and Topgolf sales growth.
“We are lowering our forward guidance and taking decisive action to lower both costs as well as capital expenditures,” said President and CEO Chip Brewer in the earnings release. The company still plans to post positive free cash flow this year, he added.
B. Riley Securities analyst Eric Wold found reason to be upbeat, citing resilient demand for traditional golf equipment and apparel. The challenges at the company “can be addressed through new pricing strategies and an operational focus.” He maintained a Buy rating but lowered estimates and trimmed his price target to $21 from $31.
TD Cowen analysts led by John Kernan shared a different perspective, pointing to the stock’s significant decline since the summer. “While strategic alternatives and private equity could look at Topgolf – management likely has high valuation hurdles for a sale,” they wrote. The analysts maintained their Market Perform rating, but dialed back their price target to $10 from $14 and lowered estimates.
For its third quarter, Topgolf posted adjusted earnings of 20 cents a share, above Wall Street’s call for 11 cents, according to FactSet. Revenue of $1.04 billion fell short of expectations of $1.05 billion. Within the Topgolf segment, same-venue sales tipped 3% lower, “primarily due to a post-Covid surge in the corporate events business last year.”
Write to Emily Dattilo at [email protected]
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