Golf as a Safe Haven Investment
Callaway Golf finds itself in a unique position as sports around the world are put on hold in an effort to abide by social distancing requirements.
Callaway Golf’s stock is undervalued, says Cowen. The firm, which has an Outperform rating on the stock, doubled its price target from $9 to $18. Cowen notes the company is facing less social distancing headwinds than other sports and says growth and innovation are undervalued for Callaway.
Long-term Upside in Topgolf: Callaway owns a 14% stake in Topgolf, one of the fastest-growing companies in the experiences business. Topgolf was reportedly eyeing an IPO for 2020 that could have valued the company at $4 billion, according to Bloomberg.
Bottom Line: In a recent Q1 update, management said it expects a quick bounce back in business due to its outdoor nature and ability to follow social distancing protocols. The company added that it sees high usage rates at many of the golf courses across North America that are currently open, and that sales in key Asian markets including Japan and Korea have been strong. Currently, about half of the golf courses in the U.S. are open, according to Callaway.
