Penn Entertainment is likely to bounce back as it benefits from stronger regional trends in gaming, according to Deutsche Bank. The investment bank upgraded the gambling stock to buy from hold. It also raised its price target on shares to $25 from $23, suggesting about 66% upside from Monday’s close. “We believe the recent selloff has been driven more by macro concerns and risk off sentiment than by any meaningful deterioration in company specific fundamentals,” analyst Steven Pizzella said Tuesday in a note to clients. “[PENN] now offers a more attractive risk/reward profile.” Shares have fallen roughly 29% over the past three months through Monday’s close, partially due to macroeconomic headwinds and rising competition from alternative gambling and entertainment platforms. PENN 3M mountain Shares are down about 29% over the past three months. However, the stock should gain ground as regional gaming trends improve over the next few months, according to Deutsche Bank. “Regional trends should improve as calendar headwinds reverse,” Pizzella wrote. “We expect regional gaming trends to normalize in September following calendar related headwinds in August, including an estimated ~250 [basis points] impact from the calendar, given one less Friday this year, plus the Labor Day shift.” He added that data on recent regional gaming trends, due out over the next week or so, could be a key near term catalyst for Penn. Deutsche Bank’s call falls in line with consensus on the Street. Of the 21 analysts covering PENN Entertainment, 13 have a buy rating on the stocks, while eight have a hold on it, LSEG data shows.
