On April 27th, Penn National Gaming ($PENN), a Pennsylvania Casino Operator, hit its lowest point of the past year of $36.76. However, Morgan Stanley has now upgraded the stock from an equal weight listing to an overweight stock. Despite the continued dropping of the stock price, they have the price target of $51, which was 38.7% currently higher than it is now. Morgan Stanley cites the growth opportunity for both theScore and Barstool Sports for leading to a solid buying opportunity.
Sportsbook of the Month: FanDuel
The Beginning Of A Turn?
A study done by Schaffer’s Investment Research showed that the 20 day moving average (from when the study was completed), showed a 60% decrease in the stock’s value year to date. The analysts at Schaffers however believe that the stock could be seeing a short term increase in value as the reports that they’re evaluating show that the stock is on the verge of being oversold. Lillian Currens, the Deputy Editor of Schaffer’s Investment Research calls this a pivot point for $PENN as 7 out of the 15 analysts consider the stock a hold while 8 have a buy or higher rating.
Despite the strengths on the sportsbook side that Penn National Gaming has with theScore and Barstool Sports, one expert in the industry believes that their success will come through the casinos. Howard Klien, a casino industry expert with over 30 years of experience, calls Penn National Gaming one of the savviest operators in the gambling industry. He says that we are at the beginning of a large demand for a combination of leisure and gaming, led by regional casinos, which Penn National Gaming can already provide. He predicts at the very least 2 to 3 quarters of consecutive growth in terms of revenue gained and EBITDA which will move the stock price in a more favorable value. However, he calls the attempt at valuing Penn National Gaming for sports betting as a “fool’s errand” and that the brick and mortar casinos are safe and the only realistic way for investors to evaluate Penn’s value is within how their 44 physical casinos perform.
Over the past couple of years, Penn National Gaming has made several transactions and purchases in order to boost its brand from an online gambling point of view. In January 2020, Penn acquired a 36% share of Barstool Sports for $163 million. The deal also provided Penn with the opportunity to obtain 50% ownership in 3 years’ time and the rights to acquire full ownership of Barstool. One of the biggest reasons for the acquisition was to use the Barstool name for the Penn digital sportsbook and to avoid large marketing costs as the Barstool name already had a following of millions on social media. In October 2021, Penn acquired Score Media and Gaming Inc. (also known as theScore) for $2 billion in cash and stocks. The acquisition helped solidify Penn’s digital gaming and media strategy to provide customers with a one-stop shop for their entertainment. With theScore being Canada’s number one sports media app and number three in North America, it was a purchase that not only gave Penn power in America but also across the border.
Penn National Gaming owns and operates the Freehold Raceway in New Jersey as well as the Hollywood Casino at Kansas Speedway in Kansas. They also lease/manage a long list of casinos, resorts, and raceways in over 10 states in America. In Pennsylvania alone, Penn has it’s hand in the following:
- Hollywood Casino at Penn National Race Course
- Hollywood Casino at The Meadows
- Two mini-casinos (Hollywood Casino York & Hollywood Casino Morgantown)
- Barstool Online Sportsbook
March 2022 saw Barstool online sportsbook rank 4th in the state of Pennsylvania for both revenue and handle compared to the other 14 legal online betting apps. Hollywood Casino yet again had the number 1 spot for revenue for March. Both Barstool online sportsbook and Hollywood Casino combined for $51.6 million in revenue. Out of the 16 brick and mortar casinos in the state of Pennsylvania, the Hollywood Casino at Penn National Race Course (PNRC) stated $16.7 million of slot revenue for the month, which ranked 5th highest in the state and 10th in table games. The 6th highest in the state was the Hollywood Casino at The Meadows with a revenue of $13.9 million. The Meadows ranked 11th for table games.