Penn National Has 'Significant' Market Share Opportunity In Online Sports Betting: Rosenblatt

A Penn National Gaming PENN analyst has issued a Street-high price target and laid out a case for shares of the sports betting stock to hit $300 if everything goes perfect.

The Penn Analyst: Rosenblatt Securities analyst Bernie McTernan initiated coverage of Penn National with a Buy rating and $80 price target.  

The Penn Takeaways: “With a unique, content focused strategy, we believe PENN has the opportunity to gain significant share in the online sports betting market at above peer margins driven by their Barstool partnership and physical footprint,” McTernan said in the initiation note. 

“The key point is that Barstool has a wide reach in an important demographic for sports betting with an engaged and growing user base,” the analyst said.

Barstool reaches 48% of millennial and Gen X men, which covers a key young male demographic that typically bet on sports, he said. 

Rosenblatt's price target is based on the belief that Penn National can reach a 15% market share, which would likely put it in third place behind leaders DraftKings Inc DKNG and FanDuel.

McTernan's $15 bear case based on the unknown success of the Barstool App and the new customer acquisition method.

The analyst's $300 bull case is predicated on Penn National becoming a market leader, with 33% market share in the territories in which it operates.

The bull case also comes from a higher market size of $23 billion for sports betting compared to the $18 billion laid out in the base case.

Sizing Up the Market: Rosenblatt Securities is forecasting an $18-billion sports betting opportunity and $21-billion market for iGaming.

Bank of America has estimated the market size at a combined $24 billion for sports betting and iGaming.

Morgan Stanley believes the total combined market for sports betting and iGaming will hit $12 billion in 2025.

Benzinga’s Take: McTernan echoes a lot of what Dave Portnoy, Barstool's founder and president, recently said on Twitter.

Barstool has loyal fans who root for the brand, and Penn has a built-in customer base that other companies can’t buy that could make the Barstool App a success from the start.

PENN Price Action: Shares of Penn National were up 7.29% at $62.39 at the time of publication.

The stock reached a new 52-week high of $65.43 Thursday.

Penn National shares are up over 130% in 2020.

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