Penn National Stock Forecasts Create Division Among Analysts

Posted on: June 17, 2021, 11:35h. 

Last updated on: June 17, 2021, 03:16h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Sixteen analysts cover Penn National Gaming (NASDAQ:PENN) stock, and while there’s not an overt consensus on the regional casino operator, the sell-side leans bullish. But it’s price targets that are a source of dissent among analysts following the name.

Penn stock
Bull and bear statues near Wall Street. Analysts are heavily divided on Penn National Gaming. (Image: MarketWatch)

Barron’s recently screened S&P 500 stocks, of which Penn is one, based on the gap between the highest and lowest price forecasts – the so-called bull/bear spread. The news outlet turned up 24 stocks with spreads of at least 86 percent, and the casino operator is on the list. In fact, it’s the only gaming equity in the group.

While Penn stock is enduring its share of struggles — it’s off 37.57 percent over the past 90 days — inclusion on the list isn’t an indictment. Previous iterations of the list actually produced stellar returns.

“A year ago, buying controversy was a good idea. The 24 most controversial names in the S&P 500 as of June 2020, identified via Barron’s stock screen, have returned about 105% on average over the past 12 months. That is almost twice the average return of the typical S&P 500 stock. All 24 stocks are higher,” according to the financial journal.

Currently, the gap between the lowest and highest Penn price targets is 149 percent, ranking it fifth on Barron’s list. Two of the names ahead of Penn — Tesla (NASDAQ:TSLA) and ViacomCBS (NASDAQ:VIAC) — fit the bill as controversial stocks.

House Divided over Penn Stock

Off its March 2020 coronavirus pandemic lows through March 2021, Penn National wasn’t just one of the best-performing gaming equities. It was one of the stars among domestic stocks, running from just under $4 to a high of $142.

While the stock is still mostly liked by analysts, it’s off 46.32 percent from its 52-week. Compounding that weakness is the fact that Penn is lower 5.56 percent over the past week, and hasn’t traded above its 50-day moving average in nearly three months. In other words, it’s not surprising analysts are divided on the name, and that they are.

“The 14 analysts offering 12-month price forecasts for Penn National Gaming Inc have a median target of $114.00, with a high estimate of $151.00 and a low estimate of $31.00,” according to CNN Businesses.

From current levels, Penn stock would need to almost double to hit $151, and gain 50 percent to reach the median forecast of $114.

Daring Analysts Get Vindication

During its meteoric rise, there was a point at which Penn stock had a larger market capitalization than rival MGM Resorts International (NYSE:MGM). And during that ascent, analysts received public lambasting if they waxed bearish on the name.

That happened last June when Barstool Sports founder David Portnoy issued a viral, expletive-laden rant bashing Deutsche Bank analyst Carlo Santarelli for issuing a “sell” rating on Penn. The gaming company owns 36 percent of Barstool.

Last October, Santarelli lifted his price target on Penn to $31 from $22.