PENN Entertainment Strategic Review Is Unlikely, According to Analyst

The shares of the leading American gaming and entertainment company formerly known as Penn National Gaming, PENN Entertainment, took a dip after an analyst hinted that a near term strategic review of the company’s operations is unlikely. The company’s shares on NASDAQ traded around $19 prior to the announcement.

However, a notable decrease of nearly 10% was observed after an announcement made by Barry Jonas, an expert analyst with Truist, as reported by Seeking Alpha. The shares took a hit of 8.66%, slumping to $17.40 per share as of the market close on Friday.

The latest announcement comes after late last month, PENN’s shares soared amid activist investor criticism. At the time, Donerail Group, one of the company’s shareholders, urged the company to assess its assets and consider strategic divestment in order to ensure value for the investors.

“The Company’s inability on each Interactive initiative has resulted in a loss of market confidence and the stock being dragged down with it,” explained Will Wyatt, a managing partner for the Donerail Group, in a six-page letter sent to PENN’s chairman of the board of directors, David Handler.

In light of the activist investor’s letter, PENN’s shares marked a solid 20% increase. However, the expert analyst with Truist, who recently met with the management team of the gaming giant, revealed that a strategic review of the company’s operations in the near term is unlikely.

“Despite the activist letter, we don’t think any sort of formal strategic review at PENN is likely in the near-term.“

Barry Jonas, Truist analyst

The Analyst Raised PENN’s Price Target

Although Jonas said that a near-term review for PENN is unlikely, he raised the price target for the company from $23 to $25. The buy rating for PENN didn’t change as of Friday when the announcement was made.

Supporting his opinion that a near-term strategic review is unlikely, the expert explained that this is due to the “clear ESPN Bet product roadmap” as well as the football season. What’s more, Jonas acknowledged the company’s solid position within the land-based sector.

“We also note PENN is one of the most efficient land-based operators in our coverage, which limits any low hanging operational synergies,“

added Jonas

Responses of trading markets in light of predictions or announced changes are not uncommon. Strategic long and short term reviews are usually completed whenever operators consider expanding or need to address different market challenges. Such reviews can recommend strategic mergers and acquisitions or divestment of certain assets, among other actions.