Penn Entertainment’s Value Increases Following Analyst’s Critique of ESPN Bet’s Zero Valuation

Analysts are bullish on PENN Entertainment (NASDAQ:PENN) following the launch of their sportsbook ESPN Bet in November 2023. Truist analyst Barry Jonas upgraded the stock from Hold to Buy with a price target of $23, citing the undervaluation of ESPN Bet in the company’s overall valuation.

Jonas believes that the market is not assigning any value to ESPN Bet at current trading levels, presenting a compelling risk/reward opportunity for investors. He points out that PENN Interactive, which includes ESPN Bet, has multiple profitable businesses beyond just the sportsbook. Even if ESPN Bet were to fail, the Interactive segment would still hold value for Penn.

The analyst also highlights the potential for PENN’s online licenses to generate recurring skin fees from other sportsbooks, as well as the profitability of the company’s iGaming business. He sees upside potential for ESPN Bet and the Interactive segment from their current levels, noting that ESPN Bet has already established itself as a top-four player in the market.

Despite the positive outlook, Penn shares are currently trading at $17.26, up 2% on Tuesday. The stock has a 52-week trading range of $15.88 to $31.63, with shares down 41.7% over the last year. Investors will be eagerly awaiting the company’s first-quarter results on May 2 to see if they can exceed low expectations and drive the stock price higher.