Is Barstool Sportsbook PENN's Ace In The Hole, Or A Risky Bet?

Needham & Co is hosting its Annual Needham Technology & Media (TMT) Conference this week and shared their thoughts with investors on PENN Entertainment Inc's PENN Barstool Sportsbook, and where they expect the stock to go from current levels.

The event featured a fireside chat with PENN CEO Jay Snowden and CFO Felicia Hendrix, and the key discussion points included the upcoming launch of the Barstool Sportsbook app’s new tech stack, performance in Ontario, strong retail trends, and digital profitability.

The PENN Analyst: Bernie McTernan reiterated a Buy rating on the stock with a price target of $44.

The Penn Takeaways: McTernan noted that PENN is gearing up for a pivotal tech stack transition in July, with four main focus areas. Reactivation and retention, user experience and speed, personalized promo capabilities, and a push for iGaming cross-selling are the mainstays of the overhaul.

The analyst said the move comes as PENN’s retail casino segment continues to exhibit strong consumer trends from January through April, with no signs of weakness.

The company marked its most successful slot volume weekend of the year at the tail end of April, McTernan said.

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In the digital realm, PENN is aiming to maintain Barstool Media at breakeven, using it as a launchpad for customer acquisition, while seeking to generate profit in other digital areas. On track to boost its interactive adjusted EBITDA by a solid $100 million in 2023, Needham said the company appears poised to make a significant impact in the rapidly growing sports betting and iGaming markets.

Needham is bullish on PENN’s potential, predicting a total addressable market of $40 billion in the U.S., citing the company’s distinctive content-driven customer acquisition strategy via Barstool as a key differentiator in the industry.

McTernan said the main risk to the investment is increased competition, or the departure of Barstool celebrities, including founder Dave Portnoy.

For more on the sports betting landscape and what could be next for popular betting segments and legislation, tune in to the Benzinga Sports Betting Titans virtual event on May 24.

PENN Price action: Shares of PENN Entertainment are over 5.3% higher to $24.42 at last check on Wednesday.

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Photo: Focal Foto on Flickr.