Morgan Joseph Downgrades Callaway Golf (ELY) to Hold; Valuation Call
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Morgan Joseph downgrades Callaway Golf (NYSE: ELY) to Hold.
Morgan analyst says, "Preliminary 3Q09 results below expectations; EPS indicated at ($0.24); The expected EPS of ($0.24) should come in roughly $0.08 below our prior estimate and $0) impact related to the company's preferred stock, 3Q's result came in slightly below our former projection...Highly promotional atmosphere continues to pressure gross margins. Lower sales/intense promotional activity is expected to pressure Q3 gross margins by over 70bps. Callaway's gross margin reduction initiatives appear to be ahead of schedule, but heavy discounting and consumers shifting to lower priced/lower margined offerings may continue to hamper gross margins. Offsetting some of the sales and gross margin declines should be lower operating costs, which declined roughly 9%, in dollars, Y/Y as the company continues to manage operating costs tightly through a challenging time...Long-term prospects remain solid."
To see more analyst ratings on ELY Click Here.
Callaway Golf Company, together with its subsidiaries, designs, manufactures, and sells golf clubs and golf balls in the United States and internationally.
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