By Sam Boughedda
Canaccord Genuity initiated coverage of Penn Entertainment (previously Penn National Gaming) (NASDAQ:PENN) with a Buy rating and $50 price target on Thursday.
Analysts there said in a note to clients that technological innovation is once again transforming the gambling industry, with online sports betting and casino expected to drive the majority of the industry's growth in the US over the next decade.
"The recent name change to Penn Entertainment highlights the importance of PENN's owned media properties to its digital gaming ambitions, with Barstool and theScore both expected to deliver efficient customer acquisition and engagement," wrote the analysts.
Canaccord also believes the company's omnichannel strategy differentiates it from most peers, with its "land-based casinos not only flipping market access from a cost to profit center but also enabling cross-selling, with the annual value of a customer that visits a property and plays online ~5x that of those who only visit a casino."
"Shares of PENN have remained under pressure amid broader market volatility, and at current price levels, despite the potential for an economic recession, we think investors can gain access to a very reasonably valued, consistent, and strongly profitable regional casino business with upside from participation in the rapidly expanding OSB and iGaming markets," the analysts concluded.