Analyst John Kernan expects the Carlsbad, Calif., golf-equipment producer and Topgolf to be among the "reopening winners" in 2021 and 2022, but also says that upside is already reflected in consensus analyst estimates and the stock's current valuation.
The firm raised to its price target to $28 a share from $22.
Growth assumptions at the firm into fiscal 2024 and 2025 suggest earnings before interest and taxes in core golf equipment and soft goods will grow at a double-digit compounded annual rate. Kernan says, however, that that is already priced into the stock.
During an earnings call in August, Callaway said it expected the coronavirus pandemic to hurt sales through 2021.
Also last year, Callaway reached an agreement to purchase the shares of Topgolf Entertainment Group it didn't already own for about $2 billion.
Dallas-based Topgolf operates about 60 entertainment centers in the U.S. and elsewhere that offer virtual golf-related games and lessons and host private parties.
Callaway stock last week touched a 52-week intraday high of $32.59, up 36% in 2021 to that point.
Callaway shares at last check were down 4.6% from Friday's close at $28.55.
Last week, Callaway reported a fourth-quarter net loss of $41 million, or 43 cents a share, widened from a loss of $29 million, or 31 cents, in the year-earlier quarter.
Revenue advanced 20% year over year to $375 million, surpassing analyst estimates of $337 million.