PENN Entertainment And ESPN Bet Hold Potential Amid Regulatory Hurdles: Analyst

Benchmark analyst Mike Hickey initiated coverage on the shares of PENN Entertainment Inc PENN with a Hold rating.

With a strategic focus on expanding its digital footprint, leveraging high-profile partnerships, and enhancing its land-based operations, PENN is well-positioned to capitalize on the growing demand for sports betting and online gaming, said the analyst.

The expansion of ESPN Bet is poised to benefit from the ongoing rapid growth of the U.S. online gaming market, which the analyst anticipates could surpass $30 billion by 2028.

Related: ESPN Bet Is Coming To New York: What Penn Entertainment Investors, Sports Bettors Should Know

Further legalization of online sports betting, and iGaming is expected to further accelerate growth beyond that projection, added the analyst.

A strong performance from ESPN Bet could significantly boost PENN’s stock by demonstrating its potential as a major player in the emerging market of North Carolina.

ESPN Bet’s forthcoming entry into the New York online sports betting scene ahead of the 2024 NFL season is anticipated to extend its reach to encompass 47% of the U.S. population, opined the analyst.

Given the company's diminished valuation, the analyst sees a potential valuation reset if ESPN Bet can gradually capture a material market share over the long term.

Regulatory pressures such as betting limits, marketing restrictions, and higher taxes could hinder player engagement and growth, disproportionately affecting smaller operators like PENN, according to the analyst.

Price Action: PENN shares are trading higher by 1.04% at $16.45 on the last check Tuesday.

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