Imperial Capital Upgrades Callaway Golf (ELY) to Outperform

Imperial Capital upgraded Callaway Golf (NYSE: ELY) from In-Line to Outperform with a price target of $12.00 (from $8.00).

Analyst John O'Neil comments, "Our price target represents potential upside of 40% from the recent closing price. Part of the increase in our price target is attributed a higher level of conviction on fundamentals and earnings following a group meeting with company management, which we attended on 3/5/15, and part to a higher valuation for the company's TopGolf stake."

He added, "Following our discussions with management, we are increasingly confident that not only is Callaway's team on the right track, but earnings should improve even absent any growth in the category. In our research report dated 10/2/14, we noted that the industry could improve overall profitability if the pricing and product launch cadence were more rational, and it appears that following the shake-out in the category last year, such an environment may be here sooner than previously anticipated. In addition, Callaway’s brand momentum and new product successes are evident, and in our opinion, the early results of recent product launches bode well for continued market share gains this year. Another positive is that the company recently has become more vocal about its TopGolf investment and TopGolf itself has become more visible with expansion into new markets and a partnership with the Golf Channel, so we believe ELY's stake in this business will garner increased investor attention and as it currently appears undervalued by many investors."

For an analyst ratings summary and ratings history on Callaway Golf click here. For more ratings news on Callaway Golf click here.

Shares of Callaway Golf closed at $8.58 yesterday.

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