GOLF - Topgolf Callaway: Subpar Returns Heading Into Q4 Earnings

2024-02-11 09:00:35 ET

Summary

• Bank of America reported an increase in spending at golf courses to close out 2023, but it may have been weather-driven.
• Broader concerns arise that outdoor sports and leisure activities may revert to pre-pandemic levels as fewer people work from home.
• Shares of Topgolf Callaway have experienced a decline, with a weak momentum and unconvincing valuation case, following many sell-side EPS downgrades of the stock in recent months.
• I outline key price levels to watch and assess the options action ahead of earnings Tuesday night.

Bank of America reports that spending at golf courses took a turn up to close out 2023. Mild weather may have helped, but there are concerns that as fewer people are working from home, then outdoor sports and leisure activities could revert to pre-pandemic levels. Another key trend that has emerged in the past few quarters is softer corporate event outings at Top Golf locations. Shares of Topgolf Callaway (MODG) have felt that sentiment. The stock is down from near $40 in mid-2021 to briefly under $10 late last year....

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