Penn Entertainment Stock Could Be Lifted by New Projects, Sports Betting
Penn Entertainment Stock Could Be Lifted by New Projects, Sports Betting
- Regional casino enhancements could boost shares
- Analyst sees interactive wagering, including ESPN Bet, contributing to bull case
Penn Entertainment (NASDAQ: PENN) has seen a 10.46% increase over the past 90 days, driven largely by the surging popularity of its digital gaming platforms. Analysts believe that as the company continues to expand its dominance in the sports betting market, this regional casino operator could achieve even more significant growth.
Dan Wasiolek, an analyst at Morningstar, has placed a fair value estimate of $22 on Penn Entertainment. This projection suggests an increase of over 10% from current trading levels due to enhancements in several of its regional casinos and advancements in online betting.
“We believe multiple development projects in the regional portfolio over the next few years will enhance the company’s competitiveness,” observes Wasiolek. “This includes the recently opened land property in Joliet, Illinois, and two projects set to debut in early 2026.”
The recent launch of a land-based casino in Joliet, coupled with plans for a revamped property in Aurora, Illinois, stand as key catalysts for the company, especially with rising gaming revenue in Illinois. Earlier in the month, Penn announced a $206 million expansion of the M Resort in Henderson, Nevada, which is expected to welcome guests on December 1.
Penn Entertainment Stock Could Land Interactive Boost
Penn’s ESPN Bet unit is currently a focal point for investors, many of whom view this football season as crucial for the sports betting app’s performance.
There’s a growing sentiment that ESPN Bet has entered the 2025 football season with strong momentum. Additionally, Penn’s Hollywood iGaming platform is reportedly making substantial progress within the high-margin online casino market. Wasiolek anticipates that Penn’s online gambling ventures will positively influence its earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR).
“Penn stands to gain from the multi-billion-dollar sports betting and iGaming market, benefitting from its ongoing collaboration with the ESPN brand and the rollout of parlay products as well as a dedicated iGaming app set to launch in early 2025,” adds Wasiolek. “We predict the company will achieve a mid-single-digit revenue share and profitability by 2026, with EBITDAR margins climbing to the low-20s by the end of the decade. Our forecast shows that by 2029, 29% of the company’s total sales will derive from its interactive division, a significant increase from 14%-15% in 2024.”
Penn Entertainment, much like its rivals Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), operates as an omnichannel business, offering both physical and online services. Wasiolek believes that over time, Penn can leverage its physical casino properties to enhance its online performance.
Regional Casinos Stable in Challenging Times
Penn’s M Resort is its sole gaming facility in the Las Vegas area. This limited exposure is currently an advantage since Strip visitation is down, causing concern among analysts that this trend may adversely affect casinos catering to Las Vegas locals. However, in the current climate, this lack of exposure is viewed positively.
“Despite economic uncertainties, Penn’s drive-to casino locations and online platforms are performing robustly,” highlights Wasiolek. “We anticipate continued revenue growth as the company introduces several new products over the upcoming quarters, with average sales growth of 7% projected between 2026 and 2028, driven by these innovations.”
Overall, analysts are optimistic about Penn’s Midwest operations given the South is facing stiff competition with new offerings from rival companies.
Key Takeaways
- Penn Entertainment’s stock is experiencing growth due to strategic enhancements in regional casino operations.
- Future projects, particularly in Illinois, are expected to significantly impact the company’s market position.
- The integration of interactive betting solutions, including ESPN Bet, is likely to bolster overall earnings.
- Penn’s lack of Las Vegas exposure is viewed positively amidst declining visitor traffic on the Strip.
This article provides an overview of Penn Entertainment’s growing position in the market and the strategic moves being undertaken to enhance its gaming operations.
