Callaway Rises as New Big Bertha Driver Generates Preseason Buzzby
Shares climb for a second day after gaining 16 percent in 2016
Epic driver, less competition could be a boost, analyst says
Callaway Golf Co. shares gained for a second day on speculation that its new flagship product will help it play through a sluggish industry.
The company’s newest Big Bertha driver is attracting attention from retailers ahead of its formal release and the industry’s primary trade show this month, Rommel Dionisio, an analyst at Wunderlich Securities, said Wednesday in a note to clients. That category could help Callaway gain market share in clubs as well as balls, especially as Nike Inc. exits the golf-equipment market.
“The Great Big Bertha Epic is already generating the most preseason buzz among our retailer contacts of any new golf product for this season,” Dionisio said. The world’s second-ranked player, Rory McIlroy, is said to be switching to one of Callaway’s new drivers away from Nike, Dionisio said.
The shares rose as much as 4.3 percent to $11.86 in New York, the biggest intraday gain in two months. The increase follows yesterday’s 3.7 percent advance. Carlsbad, California-based Callaway climbed 16 percent last year.
The company is poised for a gain at a critical time for the sport. Golfsmith International, the retailer of golf clothing and equipment, filed for bankruptcy in September and was acquired in November by Dick’s Sporting Goods, which closed all but 30 locations. As the number of U.S. golfers fell to 24.1 million in 2015 from a peak of 30.6 million in 2003, Nike isn’t the only company looking for a way off the course. Adidas AG said in May that it was starting talks with potential buyers for the bulk of its golf unit, TaylorMade.
Callaway posted a loss of 6 cents a share in the third quarter in November, smaller than the 12-cent loss analysts estimated. The company expects full-year revenue to be at least $870 million, up from its previous forecast of at least $855 million. Analysts are projecting sales of $878.4 million, the average of estimates compiled by Bloomberg.