Penn National Pumped by BofA, Analyst Sees Triple Digits for Hot Stock

Penn National Pumped by BofA, Analyst Sees Triple Digits for Hot Stock

The scintillating run by Penn National Gaming (NASDAQ:PENN) received more fuel today with the help of some bullish commentary from Bank of America (BofA) analyst Shaun Kelley.

Penn National Stock
Penn National Stock
Slots being cleaned at Penn National’s Plainridge Park Casino in Massachusetts. An analyst sees the stock soaring as more states approve online sports betting. (Image: Boston Globe)

In a note to clients today, Kelley reiterates a “buy” rating on Penn stock while boosting his price target on the name to $101 from $85. His new forecast is well above the Wall Street consensus of $77.06 and is enough to have the gaming name trading slightly higher today, extending a run which the shares gained more than 21 percent this week and 40 percent over the past month.

Sports betting equities, including Penn, are in rally mode this week after New York Gov. Andrew Cuomo (D), signaled he could turn to legalized cannabis and online sports wagering as ways to shore up the state’s ailing finances.

Following Gov. Cuomo’s positive remarks at a press conference on Wednesday, hopes for online sports betting (OSB) legalization in New York have surged,” said Kellley in the note. “While retail sports betting is already legal in New York, Cuomo has historically been opposed to OSB and seen as a key roadblock, so this marks a significant change in tone for New York.”

Home to the fourth-largest population in the US, the Empire State is widely viewed as one of the golden geese of the domestic sports betting industry. Without online and mobile wagering, the state isn’t capitalizing on the massive population in the New York City area. Far away from the state’s land-based sportsbooks, gamblers in the biggest US metro region head to neighboring New Jersey to place wagers on their phones, making the Garden State the country’s sports betting hub.

Imminent Progress

With New York staring down a dire fiscal position and population fleeing for lower tax states, Kelley believes the state could quickly get to work on OSB.

“We think progress could start as early as January to April, with the primary driver being the state’s $50 billion budget deficit,” said the analyst.

For operators such as Penn, the benefits are clear. With movement unlike over the near-term in California, Texas and Florida, New York would be the biggest state to approve online sports wagering, opening an addressable market the BofA analyst says is worth $1.3 billion to $1.7 billion.

If New York joins the party, it could have a domino effect, potentially compelling other nearby states to follow suit.

“New York could trigger additional regional pressure for legalizations in Massachusetts and Connecticut, both of which are on the radar for 2022, along with Ohio which seems increasingly unlikely to pass in 2020,” said Kelley.

Massachusetts and Ohio approving sports betting is meaningful for Penn because the company operates casinos in both states.

DraftKings, Too

Obviously, proliferation of OSB benefits operators that run dedicated online models, such as DraftKings (NASDAQ:DKNG).

Though it’s trading lower today, that stock got a boost from Cuomo’s comments, gaining more than 10 percent this week.

BofA’s Kelley raised his price estimate on DrafKings to $60 from $55 while maintaining a “neutral” rating on the shares.

The post Penn National Pumped by BofA, Analyst Sees Triple Digits for Hot Stock appeared first on Casino.org.

Source: Penn National Pumped by BofA, Analyst Sees Triple Digits for Hot Stock

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