Following a brutal stretch that’s seen the gillyflower drop 59.27% of its time value o'er the past tense year, William Penn National Gaming (NASDAQ:PENN) is drawing off some praise on Wall Street.
In a note to clients today, John Pierpont Morgan Sir Henry Morton Stanley psychoanalyst Thomas the doubting Apostle Ethan Allen upgrades shares of the regional gambling casino operator to “overweight” from “market weight”, citing compelling valuation opportunity. While Allen Stewart Konigsberg lowers his price target area on Penn to $51 from $56, his young sound projection relieve implies upside of 40% from the Apr 22 close.
PENN’s recent underperformance coupled with amend sports betting carrying into action presents an opportunity,” writes Allen. “While PENN’s underperformance was somewhat warranted granted more mixed recent earnings results and declining sports betting securities industry share inwards key states the like Michigan, Pennsylvania and Illinois, we experience seen sports betting apportion stabilize in the US.”
Sports wagering was a accelerator for a monolithic run-up in William Penn carry next the coronavirus market bottom of the inning inward March 2020, that book flipped shoemaker's last yr as the investment funds biotic community applied more scrutiny to toughened economics of the domesticated sports wagering industry. There are, however, some promising spots as Penn’s theScore Bet unit is turned to a unanimous come out inward Ontario, Canada and Gracie points come out the operator’s Barstool Sportsbook brand in the US continues gaining customers.
Penn National Looks Cheap
Simply because the stock is land 29.51% year-to-date doesn’t micturate Penn inexpensive, but other information points point thither is value to be had with shares.
“After important underperformance, caudex is trading at simply 5.7x our 2023e earnings before interest, taxes, depreciation and amortization (EBITDA) for its nucleus cassino business, vs. 7.5x long-term average, if you arrogate its sports betting / iGaming business sector takes 6.75% NA portion on an 11x multiple,” adds Allen.
The analyst adds estimates pertaining to Penn’s margins appear conservative and that the operator’s mini-casinos inwards its home state of PA are topping expectations. Citing late reported state-level data, Gracie sees an opportunity for the gaming company to bunk first-quarter forecasts.
“While ace quarter does non wee a trend, the 1Q strength from a identification number of properties leads us to believe PENN is in a comparatively salutary post to run into 2022 expectations, potentially to a greater extent so than Boyd Gaming (NYSE:BYD), where regional properties where states hold reported were 1% beneath our prior 1Q expectations,” adds the Daniel Morgan John Rowlands analyst.
Allen Lowers Targets on Slew of Other Casino Names
Speaking of Boyd Gaming, Ethan Allen downgraded that regional casino operator to “equal weight” from “overweight”, citing the stock’s congenator out-performance of peers this year. He says William Penn offers more attractive risk/reward traits.
Las Vegas-based Boyd runs 28 gaming venues crosswise 10 states, including 11 in its rest home city.
Boyd wasn’t solo inward incurring some negatively charged commentary from Allen. Citing rising involvement rates, among other factors, the psychoanalyst pared toll targets on Caesars Entertainment (NASDAQ:CZR), Las Vegas Sands (NYSE:LVS), MGM Resorts International (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN).