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Investing.com - JPMorgan initiated coverage on (NASDAQ:PENN) with an overweight rating and a $24.00 price target on Monday. According to InvestingPro data, the stock currently trades at $17.05, with analyst targets ranging from $16 to $30.
The investment bank cited Penn Entertainment’s "attractive catalyst path" with approximately $1 billion of new projects scheduled to open in the next two years as a key factor in its positive outlook. These upcoming projects could potentially drive upside to current financial estimates, according to JPMorgan. The company currently generates annual revenue of $6.6 billion with a 40% gross margin.
The firm also highlighted Penn’s "lucrative market access fee stream," noting this is the only aspect of the company’s Interactive business to which it assigns any value in its analysis. This revenue stream represents a significant positive factor in JPMorgan’s assessment.
JPMorgan pointed to Penn Entertainment’s improving free cash flow profile and balance sheet as additional strengths, indicating these improvements should benefit shareholders over time. The bank’s price target of $24.00 is based on year-end 2026 projections.
The presence of multiple activist investors advocating on behalf of shareholders was identified as another positive factor for the stock. JPMorgan’s $24.00 price target represents potential upside from Penn Entertainment’s current trading levels.
In other recent news, PENN Entertainment has completed the repurchase of $233.5 million of its 2.75% Convertible Senior Notes due in 2026. This transaction reduces PENN’s outstanding convertible notes to approximately $106.7 million and eliminates about 9.6 million shares from its diluted share count. In addition, PENN reaffirmed its commitment to repurchase at least $350 million of shares in 2025, separate from these note repurchase transactions. The company has also seen changes in its board of directors, with shareholders electing Johnny Hartnett and Carlos Ruisanchez at the 2025 Annual Meeting. This election was supported by the proxy advisory firm Glass Lewis (JO:LEWJ), which endorsed the nominees for their potential to enhance board oversight. However, the Say-On-Pay proposal faced significant opposition, with over 60% of votes cast against it. PENN’s recent board changes are part of a broader strategy to improve profitability, reduce debt, and accelerate capital returns to shareholders. HudsonWest LLC served as the financial advisor for the note repurchase transactions.
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