S&P 500 rises as health care, tech gain to overshadow Fed independence concerns
On Friday, Needham analysts adjusted their outlook on PENN Entertainment Inc (NASDAQ: PENN), reducing the price target to $25 from the previous $26 while still upholding a Buy rating on the stock. Currently trading at $20.39, PENN’s market capitalization stands at $3.05 billion. The revision follows PENN’s fourth quarter earnings report, which presented lower than anticipated guidance for 2025. The guidance included more profound losses in the interactive segment and a slight year-over-year decline in property level adjusted EBITDA, with the company’s current EBITDA at $596.93 million.
The analysts at Needham highlighted that the lowered expectations for the interactive division have impacted their previous view that PENN would derive shareholder value from the ESPN Bet initiative. InvestingPro data reveals that PENN is not profitable over the last twelve months, with a negative EPS of -$2.05. As PENN and Disney (NYSE: NYSE:DIS) approach the latter half of their initial partnership term, the analysts believe that both entities remain committed to making the collaboration successful. They suggest that enhancing data leverage to offer a unique and personalized betting experience for customers is key, noting that some progress has been seen in this area, albeit limited.
The analysts’ commentary underscores the importance of the partnership between PENN and Disney, emphasizing the potential for PENN to enhance its user experience and create value through the ESPN Bet platform. They acknowledge that while the current results have not fully met expectations, there is still time for the partnership to deliver on its promise. According to InvestingPro, analyst price targets for PENN range from $18.50 to $30.00, reflecting mixed sentiment about the company’s near-term prospects. Subscribers to InvestingPro can access additional insights through the comprehensive Pro Research Report, which provides detailed analysis of PENN’s financial health and growth potential.
The price target adjustment by Needham reflects a modest recalibration of expectations for PENN’s performance, taking into account the recent earnings report and the guidance provided by the company. Despite the reduced price target, the firm’s Buy rating indicates a continued positive outlook on the stock’s potential.
Investors in PENN Entertainment Inc will be watching closely to see how the company’s strategies, particularly in relation to its partnership with Disney, unfold over the coming months. The ability of PENN to innovate and improve its interactive offerings could play a significant role in its financial performance and market valuation.
In other recent news, PENN Entertainment reported its fourth-quarter 2024 earnings, which fell short of analysts’ expectations. The company posted an earnings per share (EPS) of -0.44, missing the forecasted -0.29, and revenue came in at $1.4 billion against a projection of $1.69 billion. Despite the earnings miss, Canaccord Genuity maintained a Buy rating on PENN with a $28 price target, citing the company’s geographic diversity and digital platform engagement as key strengths. Meanwhile, Stifel adjusted its price target for PENN to $22, keeping a Hold rating, and noted that while the fiscal year 2025 retail guidance aligned with forecasts, the projected losses for the Interactive segment were higher than expected.
PENN Entertainment’s management has expressed optimism about future growth, particularly highlighting plans to achieve profitability in the Interactive segment by 2026. The company also announced a plan to repurchase $350 million in shares this year. PENN’s physical expansion continues, with the new Hollywood Casino (EPA:CASP) Joliet expected to open ahead of schedule in late 2025. The company’s focus on its ESPN BET platform remains, although management acknowledged slower than desired progress in securing a leading market position.
Looking ahead, PENN has set ambitious revenue targets for 2025, with retail revenue guidance between $5.6 and $5.75 billion and interactive revenue projected to be between $1.25 and $1.75 billion. The company also plans to launch new products and expand its market share. Analysts from Canaccord highlighted the appealing risk/reward profile for investors at PENN’s current valuation, emphasizing the potential growth in the core regional casino business and the Interactive segment’s move towards sustainable profitability.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.