Penn Entertainment Price Target Raised to $17 at Morgan Stanley

Morgan Stanley raised Penn Entertainment's price target to $17 from $16 and maintained an Equal Weight rating. The firm believes the sale of Boyd Gaming's 5% stake in FanDuel for $1.75B will boost US gaming assets temporarily, as the market may anticipate further transactions and assign similar multiples to peer assets.

Morgan Stanley has increased its price target for Penn Entertainment (PENN) to $17, up from $16, while maintaining an Equal Weight rating. This upward revision follows Boyd Gaming's decision to sell its 5% stake in FanDuel for $1.75 billion before taxes [1]. The analyst believes this transaction may temporarily enhance the value of U.S. gaming assets, as the market could expect additional deals or apply similar valuation multiples to comparable assets.

The Wall Street Analysts' Forecast indicates that the average one-year price target for PENN Entertainment Inc is $21.33, with a high estimate of $26.00 and a low estimate of $16.00. This average target implies an upside of 10.54% from the current price of $19.30 [1]. The consensus recommendation from 20 brokerage firms is currently 2.5, indicating an "Outperform" status [1].

GuruFocus estimates the GF Value for PENN Entertainment Inc to be $25.52 in one year, suggesting an upside of 32.23% from the current price of $19.30 [1]. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at, calculated based on historical multiples and future performance estimates [1].

PENN Entertainment Inc reported strong financial performance in Q1 2025, despite severe weather challenges. The company achieved retail revenue of $1.4 billion and adjusted EBITDA of $457 million with margins of 33.1% [1]. The interactive segment saw record gaming revenue and significant year-over-year improvements in adjusted revenue and adjusted EBITDA [1]. The company also has a strong liquidity position with $1.5 billion in total liquidity, including $592 million in cash and cash equivalents [1].

However, severe weather impacted adjusted retail EBITDA by at least $10 million in the quarter, and the interactive segment faced a negative $10 million EBITDA impact from customer-friendly sports betting outcomes during March Madness [1]. Corporate expenses were higher than expected due to legal and advisory-related costs of $7.7 million [1]. The company is mindful of the uncertain economic environment and potential cost pressures from tariffs, particularly on steel [1].

Boyd Gaming's (BYD) sale of its 5% stake in FanDuel for $1.75 billion has also been noted by JPMorgan analyst Daniel Politzer, who views the deal as mixed. The deal represents a highly accretive multiple but restructured Boyd's market access fees from a variable rate structure to fixed [3]. JPMorgan expects Boyd to maintain its capital allocation of share buybacks and a stable balance sheet following the sale. The firm also sees the FanDuel sale as a positive read-through to DraftKings (DKNG) and other online sports betting operators and a negative to market access fee providers such as Penn Entertainment (PENN) [3].

References:

[1] https://www.gurufocus.com/news/2971903/morgan-stanley-updates-price-target-for-penn-entertainment-penn-penn-stock-news
[2] https://www.gurufocus.com/news/2971924/boyd-gaming-byd-price-target-raised-amid-fanduel-stake-sale-byd-stock-news
[3] https://www.tipranks.com/news/the-fly/jpmorgan-views-boyds-fanduel-stake-sale-as-mixed-thefly