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On Wednesday, PENN Entertainment Inc (NASDAQ:PENN) shares rose following the announcement of three new independent board nominations by HG Vora, a significant shareholder with an approximately 20% economic interest in the company. Trading at $20.78, the stock sits near its 52-week high of $23.81, with a market capitalization of $3.1 billion. BofA Securities analyst Shaun Kelley maintained a Neutral rating on PENN stock, with a price target of $22.00, aligning with InvestingPro’s Fair Value assessment.
The nominated individuals bring a wealth of financial expertise to the table. Carlos Ruisanchez is the former chief financial officer of Pinnacle Entertainment, William J. Clifford held the CFO position at GLPI, and Johnny Hartnett is the former CEO at Superbet Group and COO at Paddy Power (LON:FLTRF), now part of Flutter Entertainment. These nominations come at a time when HG Vora believes there is considerable untapped value in PENN’s regional casino portfolio and interactive assets. According to InvestingPro data, PENN operates with a significant debt burden, with a debt-to-equity ratio of 3.69 and an overall financial health score rated as ’WEAK’.
The stock’s positive movement reflects investor reception of the potential board changes, closing up 2% on the day of the announcement. The financial and transactional experience of the nominees suggests that they may be more inclined to consider strategic alternatives rather than merely focusing on operational management. However, it is important to note that HG Vora has not presented a specific plan of action, and the nominees are suggested as independent directors.
PENN has not issued a response to the board nominations as of now. The process for a potential proxy contest will begin with a record date set for early April, followed by the Annual General Meeting, which is usually held in June. Kelley’s reiteration of the Neutral rating indicates a watchful stance as the situation unfolds. With four analysts revising earnings downward and volatile stock movements, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Penn Entertainment has been in the spotlight due to a series of significant developments. Major shareholder HG Vora has initiated a proxy fight, seeking to secure three independent board seats. The nominated candidates include industry veterans such as Carlos Ruisanchez, William J. Clifford, and Johnny Hartnett. This move comes after HG Vora expressed dissatisfaction with Penn’s capital allocation and acquisitions.
The company has also been busy with its expansion, securing a long-term partnership with Monumental Sports & Entertainment. This partnership will provide online market access for Penn’s ESPN Bet platform in Washington D.C., aiming to enhance fan engagement and visibility in the region.
In terms of financial performance, Penn reported steady Q3 results, with retail revenue reaching $1.4 billion and adjusted EBITDA at $472 million. The company also launched its Hollywood Casino (EPA:CASP) mobile application in Pennsylvania, with plans to expand it to more jurisdictions in early 2025.
On the analyst front, JPMorgan upgraded Penn Entertainment from Neutral to Overweight, setting a new price target at $27.00, anticipating growth from its investments in retail projects. However, BofA Securities initiated coverage on Penn Entertainment with a Neutral rating, forecasting a 3% lower core regional EBITDA by 2025 due to increased supply and margin pressures. These are the recent developments in Penn Entertainment.
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