Penn National Gaming (NASDAQ: PENN) has recorded 14 percent growth since the beginning of the fourth quarter, setting a trend that analysts believe could be sustained. J.P. Morgan analyst, Josef Greff on Tuesday assured clients that Penn shares prices will continue to grow.
Greff projects that the share price will be $29, which is above the Wall Street consensus target of $26.85 and also above Monday share closing price of $23.
Wall Street has commended Penn National this year for being a company that is fast growing in the US sports betting market. Penn National operates sports betting in the home state of Pennsylvania, Iowa and Nevada. The company is expected to venture into the Illinois sports betting market by the next year.
Wall Street expects Penn National stocks to soar up partly because the company is making efforts to bolster its balance sheet, which includes the sale of the Tropicana on the Vegas Strip. According to Greff, the sale of Tropicana LV will be ideal for the company;
“Our favorable view reflect a potential deleveraging catalyst via a sale of Tropicana LV/PSG, and an attractive valuation at lease-adjusted 6.9x 2020E enterprise value/earnings before interest, taxes, depreciation and amortization(EBITDA) and 16 percent free cash flow yield,”said Greff.
According to Casino.org, Jay Snowden, the new Penn National chief executive officer is set to take over the leadership of the company starting from January. He stated that the company intends to do a meaningful deleverage on its balance sheet, which includes the sale of Tropicana.
By the end of the third quarter, hedge funds recorded a 15 percent increase of shares holding of Penn National when compared to the previous quarter. HG Vora is the leading hedge fund owning more than $140 million of shares. Penn National is expected to continue generating more gross gaming revenue, which in turn could boost the stock price.