PENN Entertainment Inc (NASDAQ: PENN) has maintained its Buy rating and $26.00 price target from Needham, following an investor event held in conjunction with the G2E conference.
The firm highlighted significant year-over-year improvements in PENN's parlay mix, which has led to higher holds and gains from product enhancements that have brought the company in line with its competitors.
The analysis also underscored strong performance in the Ontario market, suggesting further growth potential and the advantages of synergies between sports betting and sports media. The anticipated integration with ESPN, expected in November, was noted as a potentially substantial enhancement to PENN's product offerings.
While the preliminary third-quarter results were described as roughly neutral, they fell short of consensus on property level EBITDAR but exceeded expectations in interactive EBITDA. Needham's outlook for PENN's interactive EBITDA in 2025 is more optimistic than the consensus but slightly less than their own previous estimates. The firm's projections for 2026 interactive EBITDA align closely with their current expectations.
In other recent news, PENN Entertainment Inc. has been the focus of several analyst firms. Needham maintains a steady price target of $26 on PENN, noting the company's strong performance in Ontario and anticipating an upcoming account linking with ESPN.
Truist Securities sustains a positive stance with a $25 target, highlighting the potential for significant EBITDA contributions from the Interactive segment by 2026. Deutsche Bank maintains a Hold rating with a $20 target, focusing on the company's confidence in ESPN Bet and its projected Interactive EBITDA for 2026. Stifel holds steady with a $20 target, awaiting further evidence of sustained market share momentum in online sports betting and iCasino operations.
PENN reported a record quarter for net gaming revenue in its Interactive segment, with Q2 retail revenue of $1.4 billion and an adjusted EBITDAR of $497 million. The company also introduced its new Chief Technology Officer, Aaron LaBerge, who has outlined plans for product enhancements and market expansion.
Barclays maintains an Overweight rating on PENN with a $23 target, highlighting the company's preliminary third-quarter Digital EBITDA, which exceeded guidance by $30 million.
InvestingPro Insights
To complement Needham's analysis of PENN Entertainment Inc (NASDAQ: PENN), recent data from InvestingPro provides additional context for investors. As of the last twelve months ending Q2 2024, PENN reported revenue of $6.28 billion, with a slight decline of 4.18% year-over-year. This aligns with the company's current market capitalization of $2.78 billion, suggesting a potential disconnect between market valuation and revenue generation.
InvestingPro Tips highlight that PENN operates with a significant debt burden and that stock price movements are quite volatile. These factors may contribute to the company's current challenges and the market's perception of its value. Additionally, analysts do not anticipate the company will be profitable this year, which is reflected in the negative P/E ratio of -7.46 for the last twelve months.
Despite these challenges, InvestingPro data shows that PENN's price-to-book ratio stands at 0.91, indicating that the stock might be undervalued relative to its book value. This could be of interest to value investors, especially in light of Needham's maintained Buy rating and the potential upside from the upcoming ESPN integration.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for PENN Entertainment, providing a deeper understanding of the company's financial health and market position.
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