Callaway Golf Shares Higher on Takeover Rumors
Callaway Golf (ELY ) announced that its chairman, Ely Callaway, died today from cancer. B. Riley & Company said this news is rekindling takeover rumors and pushing the shares higher.
Analyst Brett Hendrickson told S&P MarketScope that some investors believe the golf products maker may be destined for a takeover given Mr. Callaway's death and the fact that ELY shares are trading well below the $30s-range enjoyed a few years ago. He does not personally expect a takeover, citing a potentially high premium that the ELY board might demand and his forecast for single digit earnings growth.
Nevertheless, the analyst notes that takeover rumors have surfaced before, with Nike (NKE ) among the companies most often whispered as a possible suitor. For now, he is keeping his market outperform rating, $18.25 stock price target and $1.10 EPS estimate for 2001.