Acushnet's Q4 Exceeded All Expectations, So Why Is This Analyst Staying Neutral?

Acushnet Holdings Corp (NYSE: GOLF) reported its Q4 results ahead of expectations. “Lack of catalysts keep us on the sidelines,” Imperial Capital’s George Kelly said in a report. He maintained an In-Line rating on the company, while reducing the price target from $20 to $19.

Acushnet reported revenue of $330 million and EBITDA of $38 million. Management guided to 2017 revenue and EBITDA of $1,565 million–$1,595 million and $220 million–$230 million, respectively.

On The Sidelines For Now

Kelly mentioned the following reasons for remaining on the sidelines:

• Challenging to grow market share in the near term: The ball business already contributes 55 percent of the company’s business. The driver and iron segments could witness pressure in 2017 from Callaway Golf Co (NYSE: ELY) and PXG.
• 2016 growth benefitted from premium apparel: The company had launched a premium apparel business in Japan and Korea in 2016. This boosted revenue growth. Management does not seem ready to further expand the initiative, Kelly said.
• Higher input costs may exert pressure on margins: “We believe ball margin could be pressured as input costs increase from historically low commodity prices in 2015 and 2016,” the analyst wrote.

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