Shares of Penn National Gaming (PENN) – Get Report rose after the country’s largest regional casino operator received a share-price upgrade from Stifel analyst Steven Wieczynski to $85 from $47, putting his target at the top of Wall Street’s list.
Wieczynski, who affirmed his buy rating, says the company will continue to benefit as states pass legislation to legalize sports gambling, Bloomberg reports.
Penn National shares recently traded at $73.37, up 8.2%. They have nearly tripled this year.
Bruce Kamich of Real Money recommends taking profit here.
As for Wieczynski, the recent commencement of sports-news app Barstool Sportsbook in addition to other betting announcements should enable the shares to keep surfing the “sports betting euphoria wave,” he said.
Though valuations are hefty compared to historical averages, Penn Gaming now represents a “story” stock, and that means sentiment is more important than valuation, Wieczynski said.
Penn sports a price-to-book-value multiple of 31.41, compared with its five-year average of 5.4, according to Morningstar.
There is “considerable momentum building behind each of PENN’s business segments,” he said.
Last week, Rosenblatt initiated coverage of Penn National with a buy and what was then a Wall Street high price target of $80 a share.
The investment firm is bullish on Penn’s acquisition of a 36% interest in Barstool Sports and on the Wyomissing, Pa., company’s burgeoning sports betting business.
“If PENN can leverage Barstool’s brand with a best-in-class and differentiated app, … there is potential for PENN to be the market leader,” analyst Bernie McTernan said.