• Thu. Sep 23rd, 2021

Penn Nationwide Analysts Divided on Destiny of Scorching Gaming Inventory


Jan 15, 2021

Posted on: January 14, 2021, 12:25h. 
Final up to date on: January 14, 2021, 01:03h.

Todd Shriber Learn Extra

Broadly talking, Wall Avenue analysts are bullish on Penn Nationwide Gaming (NASDAQ:PENN). However that view isn’t common, with loads of sell-side debate on the title rising at the moment.

A slots participant at Penn Nationwide Racecourse in Pennsylvania. Some analysts are divided on the inventory. (Picture: Getty Photographs)

Not less than three analysts chimed in on the regional gaming inventory on Thursday. Views ranged from clearly enthusiastic to overtly bearish to one thing in-between.
Getting the unhealthy information out of the best way first, at the least so far as Penn buyers are involved, Loop Capital analyst Daniel Adam downgraded the inventory to a “promote” ranking and a $60 worth forecast. That’s far under the $104-ish deal with at which the shares at the moment reside.
Penn inventory is up greater than 286 % over the previous 12 months, as buyers are wagering on the corporate’s skill to seize a big slice of the rising on-line sports activities betting market. Nevertheless, Adam calls that rally “unwarranted,” and notes that the operator’s Barstool Sportsbook app is simply dwell in Pennsylvania (it’s quickly launching in Michigan), the place it’s dropping market share.

The inventory has meaningfully outperformed over the previous 12 months (up ~300% vs. +16% for the S&P 500 Index), which we attribute to buyers’ ‘hope’ that PENN can efficiently capitalize on the rising on-line gaming alternative within the US,” stated the analyst.

He provides there are too many crimson flags surrounding Penn in the meanwhile to warrant a “maintain” ranking. His $60 projection is nicely under the Wall Avenue consensus of $80.
That doesn’t imply he’s bearish on sports activities wagering shares. Fairly the alternative. Adam has a $100 worth goal on Penn rival DraftKings (NASDAQ:DKNG) and Loop Capital lately stated DraftKings is one in every of its high concepts for 2021.
Bullish View
As famous above, Penn enjoys loads of sell-side help. Rely Truist analyst Barry Jonas amongst that group. He reiterated a “purchase” ranking on the inventory whereas bumping his worth estimate to $120 from $85. That means upside of greater than 15 % from present ranges.
“PENN shares usually are not low cost, however we proceed to see momentum across the Barstool (each for sports activities betting and the rising worth of its media model),” stated Jonas.

The Truist analyst provided up another commentary for shareholders on this gaming fairness. He notes that whereas numbers for the fourth quarter will probably be mushy due to the coronavirus pandemic, administration commentary on vaccine distribution might sign sturdy demand over the approaching quarters.

“A tidal wave of pent-up demand for in-person social engagement and experiences” may gain advantage Penn’s regional on line casino operations later this 12 months, in accordance with Jonas.
That’s related to buyers, as a result of a lot of the passion ascribed to Penn inventory is attributable to on-line casinos and sports activities wagering, with land-based operations virtually going neglected.
Within the Center
Clearly, Jonas and Loop Capital’s Adam are at reverse ends of the spectrum concerning their views on Penn inventory.
Within the center is KeyBanc analyst Brett Andress. Initiating protection of a slew of gaming equities at the moment, Andress tagged Penn with a “sector weight” ranking, implying the title will carry out in keeping with its friends.
He’s bullish on the corporate’s iGaming and sports activities betting setup by way of Barstool Sports activities however says market members are assigning “considerably lofty assumptions” to these companies.
For all of the analyst chatter on it at the moment, Penn inventory is simply barely decrease in late buying and selling.

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