Analyst Megan Alexander of Morgan Stanley maintained a Sell rating on Topgolf Callaway Brands (MODG – Research Report), retaining the price target of $6.00.
Megan Alexander has given her Sell rating due to a combination of factors related to Topgolf Callaway Brands’ recent strategic decisions and financial outlook. The sale of the Jack Wolfskin business is seen as a positive move because it eliminates a less profitable segment that has been a drag on the company’s core golf business. Despite this, Jack Wolfskin’s stagnant sales and declining EBITDA margins highlight ongoing profitability challenges.
Furthermore, while the sale proceeds are expected to improve the company’s balance sheet and liquidity, enhancing its investment case, there are concerns about the broader macroeconomic environment and tariff implications. The company has not updated its financial guidance, which could be perceived negatively, although it might be due to the rapidly changing external conditions. Additionally, potential exposure to tariffs outside of China could pose risks given the company’s reliance on international manufacturing for its golf products.
MODG’s price has also changed moderately for the past six months – from $9.910 to $6.270, which is a -36.73% drop .