Penn Entertainment is poised for a recovery as regional gaming trends strengthen, prompting Deutsche Bank to upgrade the gambling stock. The investment bank upgraded Penn Entertainment to “buy” from “hold” and raised its price target on shares to $25, up from $23, representing approximately 66% upside from Monday’s close.
“We believe the recent selloff has been driven more by macro concerns and risk-off sentiment than by any meaningful deterioration in company-specific fundamentals,” analyst Steven Pizzella said in a note to clients. “[PENN] now offers a more attractive risk/reward profile.”
Shares of Penn Entertainment have fallen roughly 29% over the past three months, impacted by macroeconomic headwinds and rising competition from alternative gambling and entertainment platforms. However, Deutsche Bank anticipates the stock will regain ground as regional gaming trends improve over the coming months.
“Regional trends should improve as calendar headwinds reverse,” Pizzella wrote. “We expect regional gaming trends to normalize in September following calendar-related headwinds in August, including an estimated ~250 basis points impact from the calendar, given one less Friday this year, plus the Labor Day shift.”
The analyst noted that upcoming data on recent regional gaming trends, expected over the next week or so, could serve as a key near-term catalyst for the company. Deutsche Bank’s outlook aligns with Wall Street consensus, where 13 out of 21 analysts covering Penn Entertainment rate the stock as a buy, while eight maintain a hold rating, according to LSEG data.
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