PENN Entertainment (NASDAQ:PENN) was upgraded to a Buy by five-star rated Craig-Hallum analyst Ryan Sigdahl following the news that rival Boyd Gaming (NYSE:BYD) is looking to merge with it. The analyst believes that the entertainment company’s retail casino assets are worth $30 per share with “another $15/share potential from either M&A or success with ESPN Bet.” ESPN Bet is PENN’s online sportsbook.
The analyst is critical of the company’s capital allocation and the lackluster performance of its Interactive business. Penn Interactive is the company’s digital arm that creates free-to-play apps and Real Money gaming. However, Sigdahl added that PENN has other valuable assets and the stock has significant upside potential.
As a result, the analyst increased the PENN price target to $30 from $20, implying an upside potential of 53.9% from current levels.
Is PENN a Buy or Sell?
Analysts remain cautiously optimistic about PENN stock, with a Moderate Buy consensus rating based on nine Buys and ten Holds. Over the past year, PENN has declined by more than 15%, and the average PENN price target of $21.97 implies an upside potential of 12.8% from current levels.
