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Penn National Gaming (NASDAQ:PENN) stands out in Morgan Stanley’s scan of the casino sector.
Analyst Thomas Allen said proprietary analysis of PENN’s app downloads in Canada suggests potential for the casino operator to take greater sportsbetting/iGaming share with theScore than expected, while PENN’s Barstool brand in the U.S. is noted to be continuing to attract customers.
In addition, the expectations for margin lift for PENN are said to look more conservative than peers, while the company’s new Pennsylvania mini casinos have been outperforming Morgan Stanley’s expectations.
On valuation: «After significant underperformance, stock is trading at just 5.7x our 2023e EBITDA for its core casino business, vs. 7.5x LT avg, if you assume its sports betting / iGaming business takes 6.75% NA share on an 11x multiple.»
The firm upgraded PENN to an Overweight rating from Equal Weight and assigned a price target of $51 to rep about 40% upside potential.
Shares of Penn National Gaming (PENN) rose 2.85% premarket to $37.59 vs. the 52-week trading range of $35.70 to $96.24.
