UPDATE: Macquarie Upgrades Penn National Gaming (PENN) to Outperform
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Macquarie analyst Chad Beynon upgraded Penn National Gaming (NASDAQ: PENN) from Neutral to Outperform with a price target of $71.00 (from $80.00).
The analyst comments "Shares underperformed the gaming group in 2021 (-40% vs gaming +48 %). We attribute the underperformance to lower market share in online markets, tough 2022 gaming comps and questions around the founder of Barstool, Dave Portnoy, and alleged incidents’ that happened in the past. With PENN shares now trading in the low 40’s, we believe the market is giving little to no value for the online business ($23/ps valuation) including the recently closed SCR acquisition. Operationally, PENN mgmt. continues to build digital in a massively different way than peers. For example, CZR (17% share in 3Q handle), MGM (26% share in iGaming/OSB) and FanDuel (42%/18% share in iGaming/OSB) each expect to lose hundreds of millions in ’21/22 and expect profitability inflection in ’23 (not focusing on inflection in ’22). Mgmt. guided to a $20m loss for Penn Interactive in 4Q, and further noted that losses in ’22 should be under $100m with profitability to follow in 2023. In addition, while several companies have implemented/actioned buyback plans during the quarter, PENN didn’t; however, they sit with ~$1.8bn cash post-SCR acquisition. Mgmt has done a solid job of fixing the balance sheet despite historically high leverage. We model lease adjusted leverage to fall below 4x during 2022E, from ~6x pre-COVID."
Shares of Penn National Gaming closed at $43.19 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesDefinitive Agreement, Dave Portnoy
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