What Happened?
Shares of golf entertainment and gear company Topgolf Callaway (NYSE: MODG) jumped 14.4% in the morning session after Jefferies analyst Randal Konik upgraded the stock's rating from Hold to Buy and raised the price target from $11 to $13. The new price target implied a potential 65% upside from where shares traded before the upgrade was announced.
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What The Market Is Telling Us
Topgolf Callaway’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Topgolf Callaway and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 8.9% on the news that the company reported fourth-quarter results, which beat analysts' revenue expectations, driven by a better-than-expected performance at Topgolf. That stood out as a positive in these results.
On the other hand, its revenue guidance for the next quarter missed, and its operating margin fell short of Wall Street's estimates. In terms of 2023 highlights, the company achieved positive free cash flow both on a consolidated basis and at Topgolf. In addition, its Callaway brand finished the year with the #1 U.S. market share for clubs, woods, drivers, fairway woods, hybrids, and irons. Overall, it was a strong quarter for the company.
Topgolf Callaway is down 37.4% since the beginning of the year, and at $8.91 per share, it is trading 46.4% below its 52-week high of $16.62 from May 2024. Investors who bought $1,000 worth of Topgolf Callaway’s shares 5 years ago would now be looking at an investment worth $416.91.
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