Shares of Topgolf Callaway Brands Corp. (MODG) jumped $1.33, or 14.3 percent, to $10.40 on Friday, November 7, after the company reported third-quarter results that topped guidance as Topgolf’s same-venue-sales turned positive for the first time in two years and the Golf Equipment segment also topped plan.

Several analysts continue to be impressed by Topgolf’s recovery, but some are looking for additional signs of stabilization and the conclusion of a sale.

Highlights reported in the quarter include:

  • Sales declined 7.8 percent to $934.0 million but exceeded guidance in the range of $880 million to $920 million. Ongoing revenues, excluding the sold Jack Wolfskin business, grew 3 percent year-over-year.
  • Adjusted EBITDA declined 4.5 percent to $114.4 million but came in well above guidance in the range of $78 million to $98 million.
  • Topgolf segment revenues increased 2 percent to $472.2 million, topping analysts’ consensus of $454 million. Same-store sales increased 1 percent, inflecting positively. Margins were up 40 basis points year-over-year (y/y). Operating income gained 9.9 percent to $31.1 million.
  • Golf Equipment segment sales advanced 4.0 percent to $305 million, topping the consensus target of $291 million. Margins were down 150 basis points. Operating income was down 13.4 percent to $23.2 million, including $8 million in incremental tariffs, which were partially offset by gross margin and cost savings initiatives.
  • Active Lifestyle segment (soft goods business marketed under the Callaway, TravisMathew and Ogio brand names) revenues fell 41.2 percent to $5 million. Excluding the sold Jack Wolfskin business, revenue was approximately flat. Operating income declined 29.4 percent to $1.37 million, with a $4 million tariff impact.
  • Topgolf Callaway  said it faced an incremental tariff expense of $12 million in the quarter and continues forecast approximately $40 million impact for the full year. As part of efforts to reduce the impact of tariffs, the company recently implemented a reduction in force of about 300 positions.
  • Topgolf Callaway raised its consolidated full-year 2025 revenue guidance to a range of $3.90 billion to $3.94 billion (previously $2.80 billion to $3.92 billion) and its consolidated full-year adjusted EBITDA guidance to a range of $490 million to $510 million (previously, $1265 million to $295 million).

Shares of Topgolf Callaway closed Monday, November 10, at $10.55, off 5 cents, or 0.47 percent.

Texas Capital Securities on October 22 upgraded its rating on Topgolf Callaway to “Buy” and lifted its price target to $12 from $10 based on the expectation for Topgolf-driven upside to the third quarter and the potential for a pivot to positive same venue sales, both of which played out in the quarter.

Analyst Eric Wold reiterated his “buy” rating at the $12 target following the earnings release. He wrote, “As the company continues to move toward the planned separation of the two businesses in 2026 (with the search ongoing for a new Topgolf CEO), we believe the strengthening trends at Topgolf should only help the potential valuation of that event. We believe there are numerous opportunities for further sales and margin gains at Topgolf in 2026 and would expect a restart of meaningful new venue growth to begin in 2027, as a result.”

UBS reiterated its “Neutral” rating at a $10 price target while raising its estimates.

Analyst Arpiné Kocharyan stated that while Topgolf raised its guidance on a quarter’s beat, “questions top-of-mind for investors are sustainability of same venue growth outlook into Q4 and 2026 and timing of separation of Topgolf.”

He noted that Topgolf’s management reiterated its evaluation of both a spin-off and a sale of Topgolf, and the ”positive same-store growth at Topgolf is helping the process.” Kocharyan added that management indicated that they are midway through the process of finding a new CEO for Topgolf and “feel they have a pool of strong candidates to choose from.”

Topgolf’s former CEO, Arthur Starrs, left the company in early August to become Harley-Davidson’s CEO. With his exit, Topgolf Callaway had warned that the planned separation of Topgolf into a separate company likely would not occur until 2026.

In terms of the sustainability of same-store growth for Topgolf, Kocharyan said management indicated that the Topgolf chain continues to see improved walk-in traffic with October trends consistent with the third quarter, but corporate mix is higher in Q4 (roughly 30 percent in Q4 compared to 20 percent for FY) versus Q3 and that is what has driven flattish same-store sales in Q4 as spend per visit for a corporate customer is roughly at $70 versus $40 for the non-corporate customer.

MODG officials further noted that Topgolf Callaway is seeing incremental weakness in the Vegas and California markets in same-store sales, but sales are expected to continue to benefit from the ongoing rollout of a new point-of-sale system and improved utilization from the rollout of a more flexible reservation system.

Morgan Stanley reiterated its “Equal Weight” rating at a price target of $11.00.

Analyst Simeon Gutman said positives from Topgolf Callaway’s report included Topgolf’s positive same-venue sales, benefiting from a new digital POS system that has resulted in higher average order values, faster speed of service and labor efficiencies. He also noted that while tariff headwinds remain a risk, golf equipment sell-through “is healthy.”  Gutman added that a successful TopGolf separation would be the clearest upside driver for the stock.

Explaining his “Equal Weight” rating, Gutman wrote, “Earnings are likely to remain under pressure during ‘25e due to well-understood near-term challenges: i) TopGolf’s value strategy transition, ii) stepped up competitive intensity in Core Golf equipment due to Golf’s launch calendar, iii) tepid rounds played YTD, and iv) channel destocking in apparel business. However, we believe the market is ascribing negative value to the TopGolf franchise, and a successful separation should underscore the value of MODG’s Core Golf franchise with a cleaner, de-risked balance sheet.”

Anna Glaessgen, at B. Riley, lifted her price target from $9.50 to $11.00, but kept a “Neutral” rating on the stock.

Glaessgen wrote, “The key highlight, in our view, was another quarter of meaningful improvement in Topgolf same-venue sales, which inflected to +1 percent in 3Q; this is the first positive result in the metric since 2Q23. Importantly, this has been achieved while holding venue EBITDA margin flat. In addition, we find this all the more impressive in the context of mounting concerns about the consumer. We expect this improved performance at the concept may augment buyer interest. We remain constructive on underlying golf fundamentals and find it notable that even within off-course distribution (incl. big box), Callaway is not highlighting a material headwind from retailer caution.”

Truist reiterated its “Buy” rating at a $12 price target.

Greg Miller, in a note, called Topgolf’s infection to positive same-venue-sales “encouraging,” with same venue visits jumping 17 percent and helped by a good response to new value-oriented offerings. Continuing recent trends, 1-2 bay sales were up 2 percent while corporate-heavy 3+ bay declined 4 percent. Miller also noted that golf equipment net revenues topped consensus, with adjusted EBITDA “well above” targets.

Looking to 2026, Miller noted that MODG’s management remains confident in the improving trajectory of Topgolf’s continued recovery in same-venue sales. Miller wrote, “In addition to the traction seen from recent value initiatives, MODG expects tailwinds from 1) completion of the new POS rollout, 2) piloting in-bay and online ordering, 3) recent roll out of ‘play more’ monthly subscriptions, and 4) an array of improvements to the group/corporate business including new offerings, adding online bookings, and pricing strategy changes. We note that improvements in group traffic should have a magnified impact to SVS given the higher spend per visit (~$70 vs ~$40 retail).”

Miller also noted that MODG estimates the unmitigated FY26 tariff impact in FY26 to be more than double FY25, implying at least an $80 million gross impact. Miller wrote, “That said, management noted an array of mitigation efforts are available, including selective pricing, supplier negotiations, and ongoing cost saving initiatives.”

Image courtesy Topgolf