J.P. Morgan has raised its fourth-quarter adjusted earnings’ estimate for Penn Entertainment on the back of a stronger-than-expected showing for regional gaming operators, but suggested cold and snow are likely to impact the start of 2025.
Analyst Joseph Greff released a note to investors citing state-reported gaming-revenue data indicating “solid demand” since the presidential election, as well as good demand before the election.
“October was a strong month, which partially offsets our lower Interactive EBITDA estimates as a result of well-known unfavorable sports outcomes in the month of December,” Greff said.
Penn will report its fourth-quarter results on February 27 and Greff expects management’s outlook “to contemplate what has likely been depressed demand as a result of the recent adverse and brutally cold weather that has been experienced across many parts of the country, though we note there may be some degree of recapture in the icasino segment.”
For Penn’s regional segments, Greff estimates that gaming revenue was up 3% year-over-year in the fourth quarter. That compares to a 2% decline in the third quarter, flattish growth in the second quarter, and a 4% decline in the first quarter.
“From a monthly perspective, we estimate Penn’s regional gaming revenue was up 5% year-over-year in October, up 9% in November, and down 3.5% in December. We note a less favorable December calendar comparison, with two fewer weekend days year-over-year and ongoing construction disruption in certain markets.”
For the fourth quarter, Greff forecasts land-based EBITDAR of $467 million compared to $457 million previously and Interactive segment losses of $105 million compared to $90 million previously. Their 2025 and 2026 land-based casino EBITDAR estimates are largely unchanged, but they lowered their Interactive segment EBITDA by about $20 million each to a $70 million loss in 2025 and a $60 million profit in 2026. It was $50 million and $80 million previously.
Greff said their 2026 Interactive estimate includes an assumption that Penn generates about $80 million of interactive EBITDA from its market access fees only in 2026. Their total EBITDAR after corporate expenses estimates go to $332 million for the fourth quarter ($338 million previously), $1.685 billion for 2025 ($1.705 billion previously), and $1.88 billion for 2026 ($1.9 billion previously).
J.P. Morgan maintains its year-end 2025 price target of $27. The stock has been trading around $20.
