Topgolf Stock Sinks. Guidance Is Rough.

When the company reported third-quarter earnings after the close Wednesday, it said full-year 2023 consolidated net revenue will be between $4.24 billion and $4.26 billion. It also cut its outlook for adjusted earnings per share and Topgolf same venue sales growth.

“We are lowering our forward guidance and taking decisive action to lower both costs as well as capital expenditures,” said President and CEO Chip Brewer in the earnings release. The company still plans to post positive free cash flow this year, he added.

The weak Topgolf sales growth outlook was one reason Stephens analysts lowered their rating on shares to Equal Weight from Overweight, slashed adjusted earnings estimates for this year and next and reduced their price target to $13 from $24.  The company now expects same venue sales growth to be down slightly in percentage terms, compared to a prior call for mid-to-high single digit growth.

B. Riley Securities analyst Eric Wold, however, was more upbeat, citing resilient demand for traditional golf equipment and apparel. The challenges at the company “can be addressed through new pricing strategies and an operational focus,” he wrote. He maintained a Buy rating but lowered estimates for 2023 through 2025 and trimmed his price target to $21 from $31.

TD Cowen analysts led by John Kernan maintained their Market Perform rating, but dialed back their price target to $10 from $14 and also lowered estimates.

For its third quarter, Topgolf posted adjusted earnings of 20 cents a share, above Wall Street’s call for 11 cents, according to FactSet. Revenue of $1.04 billion fell short of expectations of $1.05 billion.

Within the Topgolf segment, same-venue sales tipped 3% lower, “primarily due to a post-Covid surge in the corporate events business last year.”

Write to Emily Dattilo at [email protected]