Penn Entertainment's Losses Could Be 'Higher For Longer,' Analyst Says
Portfolio Pulse from Priya Nigam
Penn Entertainment Inc (NASDAQ:PENN) shares experienced a slight increase despite a premarket drop and a disappointing first-quarter report. BofA Securities analyst Shaun Kelley downgraded PENN from Buy to Neutral and cut the price target from $28 to $17.50, citing challenges with ESPN Bet's low revenue and high fixed costs. Kelley highlighted the difficulty in scaling ESPN Bet to profitability, leading to potential prolonged losses, which poses a significant risk to future estimates. Additionally, Kelley noted Penn Entertainment's lackluster core business trends and rising balance sheet leverage, increasing execution risk.
May 13, 2024 | 4:36 pm
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Penn Entertainment was downgraded from Buy to Neutral by BofA Securities, with a price target cut from $28 to $17.50 due to challenges with ESPN Bet and lackluster core business trends. Despite this, shares were up 0.65% to $16.18.
The downgrade and price target cut by BofA Securities reflect significant challenges and risks for Penn Entertainment, particularly with ESPN Bet. However, the slight increase in share price despite these challenges suggests a mixed short-term impact. The downgrade indicates potential concerns about the company's future profitability and growth, which could temper investor enthusiasm. However, the mention of PENN as a deep value turnaround might attract investors looking for undervalued opportunities, balancing the short-term impact.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100