Topgolf Callaway gains after BofA backs bullish view

Posted By: ndeeney

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Bank of America reiterated a bullish view on Topgolf Callaway Holdings (NYSE:MODG) on Monday after hosting a virtual fireside chat with top execs.

Alexander Perry said the firm’s discussions with President & CEO Chip Brewer, CFO Brian Lynch, and Topgolf Callaway CEO Artie Starrs provided more clarity on the benefit Topgolf Callaway is seeing from its implementation of Project PIE (the new digital bay inventory system). MODG is expected to see a 2% sales lift for Topgolf Callaway, which BofA attributes to reservation fees coming in 2X the amount of reservations available on a PIE venue vs. a non-PIE venue.

“We believe Topgolf Callaway is also seeing better bay utilization at peak wait times which has improved to 80% from 75% at year end 2022 as PIE provides more predictability on when bays need to be turned. MODG sees high 80% bay utilization during peak times as a target.”

Looking ahead, BofA see more opportunity for comparable sales for MODG beyond 2023 from Project PIE given Topgolf Callaway’s ability to pull more dynamic pricing levers which should help to drive overall utilization from current levels of less than 40%.

BofA has a Buy rating on MODG and price target of $32. Shares of MODG moved up 1.69% in premarket trading on Monday to $18.66.

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