Masters winner Jon Rahm showcased Topgolf Callaway Brands (MODG) all weekend at Augusta National, and one analyst sees several tailwinds for the stock.

“We believe the market has yet to fully appreciate Topgolf Callaway Brands’ transformation into a preeminent golf entertainment platform,” Jefferies analyst Randy Konik wrote in a client note published on Monday. “Topgolf is a high-quality asset with scarcity value, enabling Topgolf Callaway Brands to widen its total addressable market (TAM) and augment its growth algorithm. Tailwinds to golf remain favorable and Topgolf Callaway Brands is uniquely positioned to capitalize on growing interest in the sport.”

Konik’s $56 price target on the stock assumes 171% upside from current levels.

Callaway lured Rahm away from rival Taylormade with a multi-year sponsorship contract in 2021.

The 28-year old Spaniard won the Masters using Callaway’s new Paradym woods, Apex irons, Jaws wedges, and Chromesoft balls. Rahm’s golf bag was emblazoned with the Callaway logo, while the strap bore Topgolf — the golf experience brand Callaway bought for $2.66 billion in 2021.

Rahm is among a host of other up-and-coming, high-profile golfers Callaway sponsors, including Sam Burns and Xander Schauffele.

Despite Callaway’s youthful team performing generally well on the links — which lends itself to prominent placement on TV and social media — shares have lost about 8% in the past year. The stock trades at a 20% discount to its five-year average enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio.

Jefferies’ Konik thinks the stock price reflects a “pressured consumer,” rising interest rates, and recession fears weighing on pricey equipment sales. To that end, through the first two months of the season golf rounds played are up only 1.8% compared to 2022 according to data from the National Golf Foundation.

At the same time, Konik listed several reasons Topgolf Callaway Brands stock looks too good to ignore.

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First, population demographics are favorable to the golf industry.

Konik estimated that 60-plus year olds represent nearly half of annual rounds played and a greater portion of annual golf equipment spending. With current population projections suggesting the number of people aged 70-74 will hit 18.8 million in 2035 (compared with 14.8 million in 2020), it stands to reason that will drive a meaningful lift in golf equipment sales that should benefit Topgolf Callaway Brands.

Second, Konik noted that since 2013 the average major club launch price has moved up an “impressive” $180, or 46%, from $390 to $570.

“In our view, the consumer has given original equipment manufacturers permission to continue to push the envelope, in terms of price, so long as there is sufficient innovation to back it,” Konik wrote.

Third, Konik believes investors do not “appreciate” the growth potential of the Topgolf and apparel brand TravisMathew under Callaway’s tent. Topgolf Callaway Brands recently lifted its estimate for Topgolf unit potential to 250 from 200, and TravisMathew is on track for $1 billion in sales — up from $300 million in 2022.

“In our view, it’s a hidden gem,” Konik wrote of TravisMathew.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com

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