J.P. Morgan Flags Overvaluation In Acushnet—EBITDA Outlook Suggests Limited Upside

J.P. Morgan analyst Matthew R. Boss reiterated an Underweight rating on the shares of Acushnet Holdings Corp GOLF with a price forecast of $64.00.

GOLF posted an adjusted EBITDA of $12 million for the fourth quarter, aligning closely with consensus estimates.

The analyst noted that the revenue growth of 7.8% fell short of the Street’s +9.9% expectations but was partially offset by a 300 basis point improvement in gross margin.

The analyst highlighted that the management provided FY25 adjusted EBITDA guidance of $405 million – 420 million (compared to the Street’s $412 million), expecting sales growth of 1.1% – 3.2% year-over-year, which is below the Street’s forecast of 3.8%, with modest gross margin growth offset by SG&A leverage.

According to the analyst, in the near term, first-quarter sales are projected to decrease year-over-year due to several factors: the Pro V1/V1X launch expected to be more concentrated in the second quarter, tougher year-over-year comparisons in the first quarter, and foreign exchange headwind.

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By segment, management indicated that growth in the golf ball category is expected to be front-loaded in the first half, driven by the Pro V1/V1X launch, while growth in golf clubs is anticipated to be back-loaded in the second half due to the introduction of new irons.

The analyst models first quarter FY25 reported sales to decline 3.1% y/y, 700 basis points below the Street at 3.9% growth.

Crucially, management highlighted that the adjusted EBITDA outlook accounts for the anticipated negative effects of foreign exchange but excludes the impact of recently imposed tariffs.

With GOLF sourcing 6% of its cost of goods sold from China and having limited exposure to Mexico and Canada, the 10% additional tariff on China is expected to create a $7 million headwind, which is not yet reflected in the guidance, the analyst quipped.

The analyst sees downside based on the valuation multiple and the 2026 EBITDA projection, which suggests that the shares are overpriced compared to their current trading levels.

For the next few years, the analyst views GOLF’s opex investment cycle as a limitation to bottom-line growth, leading to flat EBITDA and low single-digit earnings per share growth, despite having “best-in-class” brands like Titleist and FootJoy, which hold leading market shares and target the “dedicated” golfer.

Price Action: GOLF shares are trading lower by 1.62% at $63.83 at last check Friday.

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