PENN Entertainment Inc’s ESPN Bet is dominating initial download activity and charts, proving it is cutting through to customers, according to Bank of America (BofA) analysts.
In a note to clients, they upgraded shares of the integrated entertainment, sports content, and casino gaming experiences company to ‘Buy’ from ‘Neutral’ and raised their price objective to $30 from $27, implying 22% upside from Friday’s closing price.
"We think ESPN Bet creates an asymmetric risk-reward, with 1) initial download and app activity much stronger than anticipated, 2) initial offers showing promotional discipline, and 3) stable Q3 earnings being better than expected for PENN's core gaming business," the analysts wrote.
They added that ESPN Bet has been ranked in the top two slots of all free apps on the iOS store since last Tuesday, with 865,000 cumulative downloads and a 4.8 app store rating, even without data from NFL Sunday.
Analysts at BofA also project a 6% to 7% market share for PENN in the online sports betting (OSB) space, with each 1% improvement in market share expected to result in an approximate $2 increase in the company’s stock value.
Shares of PENN Entertainment climbed 7% to $26.28 in late-afternoon trading on Monday but have fallen 10% year to date.
Contact Sean at sean@proactiveinvestors.com