Penn National Gaming Price Target Pared, But Analyst Sees Fears Priced In

Penn National Gaming (NASDAQ:PENN) is trading higher today despite an analyst dramatically reducing his price target on the regional casino operator.

In a note to clients, Credit Suisse analyst Benjamin Chaiken reiterates an “outperform” rating on Penn, while paring his price forecast on the stock to $99 from $128. Although $99 is a far cry from $128, Chaiken’s new outlook on Penn is still more than double where the shares reside today, and well above the Wall Street consensus of $71.

Analysts’ price targets on Penn are trending lower to start 2022 after the stock was one of the worst performers among gaming equities last year. But there are signs of hope.

While November saw weaker results across the board (which in our view has driven some of the weakness in the stock), December recovered, with revenues up ~mid-single digit vs. November,” says Chaiken.

Pennsylvania-based Penn operates 44 casinos in 20 states.

Penn Could Perk Up

Penn is the largest regional casino operator — a trait some market participants may have lost sight of in the fervor surrounding online casinos and sportsbooks.

Chaiken says market participants’ concerns about sagging revenue and margin erosion are likely factored into Penn’s share price.

“To this point, we think that concerns around decelerating revenues and deteriorating margins are priced in,” said the analyst.

Signs of Life for Penn Stock

Penn shed 12 percent in January and the stock needs to more than triple to return to the all-time of $142. But there could be green shoots emerging, as the shares are higher by 7.57 percent over the past week.

Last August, Penn paid $2 billion in cash and stock to acquire Score Media and Gaming to gain a foothold in the recently liberalized Canadian sports wagering market.

“Launching theScore Bet in Ontario will mark an exciting expansion of our online gaming business into a major new market where we already have an established mobile sports media product in theScore app and a wide base of loyal users,” said Penn President and CEO Jay Snowden in a statement.