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Wedbush Morgan raised its investment opinion of Callaway Golf (ELY
) to buy from hold.
Analyst Rommel Dionisio cited the management's plan to implement major restructuring initiatives aimed at streamlining cost structure and improving operating margins. The analyst noted that management targets about $70 million or 62 cents per share in annualized after-tax cost savings by 2007; some of the savings are to be reinvested to build future sales growth. The analyast says the third quarter preannounced sales of $215 million are well ahead of the forecast, driven by strength of recent new product launches. Dionisio upped 2005 earnings per share estimates to 41 cents from 39 cents on $1.01 billion sales, 2006 earnings per share estimates to 90 cents from 67 cents on sales of $1.058 billion. The analyst upped the company's target price to $18 from $15.