Penn National Gaming hit a near-year low of $37.35 last Friday. Today, Morgan Stanley upgraded the casino and sports betting stock to “overweight” from “equal weight” with a price target of $51 despite the recent weakness in shares. Morgan Stanley said $PENN presents a solid buying opportunity due to the potential for growth of the theScore and Barstool Sports brands.
A pivot point for Penn National Gaming stock?
According to Schaeffer’s Investment Research, multiple trendlines emerged as pressure for the stock’s decline. Most recently the 20-day moving average, putting the security at an almost 60% TYD deficit. However, Schaeffer’s analysts note that the stock could be overdue for a short-term bounce, as its 14-day Relative Strength Index of 32 indicates it’s just on the cusp of being “oversold.”
Lillian Currens, Schaeffer’s Deputy Editor says:
Should this be a pivot point for PENN, there’s plenty of room for analyst upgrades. Coming into today, seven of the 15 in coverage called the stock a “hold,” compared to eight “buy” or better ratings. Meanwhile, short interest has been on the rise, up 5.8% in the last two reporting periods, and the 11.22 million shares sold short make up a solid 6.8% of the stock’s available float, leaving room for a short squeeze to push the equity higher.
Options bulls targeting $PENN
Options bulls are targeting $PENN with 4,113 calls across the tape so far, three times the intraday amount. The most popular by far is the weekly 4/29 40-strike call, with positions being sold to open here. In distant second is the 4/29 38-strike call.
Casinos, not sports betting, key for Penn National
Howard Klein, publisher of “The House Edge” casino investment site on Seeking Alpha, says the real value of Penn National Gaming is its casinos.
“You want to be in business with these guys; they’re among the savviest operators in the gaming space,” writes Klein.
Klein believes that we are “at the cusp” of pent-up demand for leisure and gaming. Regional casinos, like those owned and operated by Penn National, make for an easy decision by customers.
“So what I see ahead here are sequential quarters of strong revenue gains and EBITDA coming for Penn that ultimately should move the stock back into a recovery arc. The brick and mortar fundamentals are secure-but valuing Penn for sports betting is wholly a fool’s errand We have maintained, and continue to maintain, that the only sensible way for investors to value Penn is by the performance of its 44 brick and mortar casino proper.
Penn National Gaming $PENN Summary
- As of Monday afternoon, $PENN shares were selling at $37.78.
- Analyst 1-year target is $62.59 with a majority BUY.
- Penn National Gaming will release its 2022 first-quarter financial results at 7:00 a.m. ET on May 5 followed by a conference call and simultaneous webcast at 9:00 a.m. ET. Both the call and webcast are open to the general public.
Penn National in PA
Wyomissing-PA Penn National Gaming has a big presence in the Keystone State.
- Hollywood Casino at Penn National Race Course
- Hollywood Casino at The Meadows
- Along with two mini-casinos, Hollywood Casino York and Hollywood Casino Morgantown
- Barstool PA online sportsbook which operates under the Hollywood Casino PNRC license. Along with various iGaming skins under Penn National such as (Hollywood, DraftKings, BetMGM, Barstool).
March 2022 revenue for Penn National Gaming in PA
In March 2022, Barstool online sportsbook ranked fourth in PA for handle and revenue of the state’s 14 sports betting apps. Hollywood Casino continued to hold the top spot for iGaming revenue in March in PA. All the brands listed above combined for $51.6 million in revenue in March.
Now, let’s look at how land-based casinos fared. Out of the 16 brick-and-mortar casinos, Hollywood Casino at PNRC reported $16.7 million in monthly slot revenue, fifth highest in the state. Hollywood Casino at The Meadows was right behind with $13.9 million. For table games, the casinos rank 10th and 11th respectively.
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