Sticking with a “Hold” rating on Penn Entertainment stock, Jefferies Equity Research analyst David Katz reported weakness in Penn’s regional-casino performance. He kept a $20-per-share price target on the stock, which was trading at $17.
Katz reported that while regional casinos as a whole had seen a 3.2% lift recently, Penn’s casinos were only up 1.6%. “This may be indicative that [Penn] has not increased promotions to drive growth, a theme discussed by peers, but we believe top-line growth is a key element of stock performance,” he wrote.
Specifically, Katz pointed to Penn-revenue boosts at River City, in St. Louis, and Plainridge Park, in Massachusetts. Across the second quarter, River City had been up 6.2% (April), 12% (May) and 2.5% (June). During the same stretch, Plainridge Park’s revenue had risen 9.2%, 15.6% and 5.9% respectively.
Hollywood Greektown in Detroit had been down 0.2% (April), 12.5% (May) and 3.8%. Penn’s Margaritaville casino, in Bossier City, Louisiana, had slipped 12.9%, 20.7% and 11.1% during those same months.
“The strength in regional [gross gaming revenue] appears to have benefited Penn less than peers,” Katz concluded. He resumed, “taken in total, expectations and the shares point to modest growth in land-based and reversal of losses in digital.”
Turning to igaming, Katz reported that there was light at the end of the ESPN Bet tunnel: “Our impression from conversations with management. and investors suggests that the ESPN Bet product is in its best position in time for the start of the NFL season.”
ESPN Bet had been fully integrated with the network’s fantasy-sports application and its direct-to-customer products. This would facilitate personalized marketing, heading into football-heavy months, he said.
“The path to profitability by 4Q25 appears well understood,” Katz reported, “although the Street will require evidence of [market] share gains to ascribe value for the business.”
Katz had a few questions for Penn leadership heading into the forthcoming second-quarter-earnings call. He wanted to know the sustainability of regional-gambling trends. He also sought Penn’s perspective on recent increases in sports-betting taxes.
Further, the analyst hoped for continuation of stock repurchases by the company and a path to lowering the company’s debt load.
