Callaway Golf's Stock Jumps After Analyst Sees 'powerful' Comeback

Callaway Golf Co.'s stock was driven 2.5% higher in premarket trade, after Jefferies said the golf equipment seller is on the verge of a "powerful and sustainable comeback." Analyst Randal Konik started coverage of Callaway with a buy rating and a stock price target of $16, which is 66% above Friday's closing price of $9.65. Konik said findings from a Jefferies survey, combined with an analysis of Golf Digest ratings and Google search trends, suggest Callaway's new Chrome Soft ball and XR clubs should drive share gains in the near term. In addition, Konik said his research of golf course activity showed that rounds played per day showed a positive inflection, while participation rates have started stabilizing. "[Management] has done a great job of reorganizing the company to be more efficient and drive leverage in an upturn, which we are beginning to see," Konik wrote in a note to clients. "Additionally, our analysis suggests [Callaway's] minority stake in TopGolf is undervalued by the market today." The stock has run up 25% year to date, compared with a 1.1% rise in the S&P 500. In 2014, the stock fell 8.7% while the S&P 500 rose 11%.