On Thursday, William Penn National Gaming (NASDAQ:PENN) reported better-than-expected first-quarter results, but the stock up tumbled to a greater extent than viii percent.
That extends a at present lengthy glide that’s seen the regional cassino manipulator molt 18 percent over the past month and 41 percent from its March highs. Today, analysts are lining upwardly to support William Penn stock with some expression the selloff is too practically too rapidly and that it could prov to live a buying opportunity.
Morgan Stanley’s St. Thomas Woody Allen said the William Penn glide is “overdone” following what he calls a “strong” first-quarter showing. He reiterates an “equal weight” rating on the shares with a $99 toll target, implying upside of almost 18 percent from the May 6 close.
In the first of all triplet months of the year, the gaming troupe earned 55 cents a apportion on revenue of $1.27 billion. Analysts expected earnings per part of 28 cents on sales of $1.14 billion. Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) for the Jan through March period was $447 million, easy topping the consensus approximation of $393.9 million.
Encouraging Land-Based Trends for Penn Stock
During its mass meeting and subsequent raise into the S&P 500, William Penn was revered for its nascent iGaming and sports betting operations, but it’s ease the largest regional casino manipulator in the country.
Trends on that front are encouraging, but yesterday’s sell-off inward the stock may have got been a vitrine of investors pricing inwards the personal effects of COVID-19 closures that hampered the company’s first-quarter execution inwards Illinois and PA where gaming venues were closed in(p) for voice of January. Additionally, Penn’s Zia Park inwards New Mexico didn’t reopen until too soon March. Still, analysts similar what they see.
Pent-up exact from their brick and trench mortar customers is impressive, and has yet to to the full rollout crossways PENN’s entire portfolio,” said Stifel’s Steven Wieczynski in a musical note to clients. “Results inward the less qualified South segment outpaced the broader PENN portfolio, and bodes good for states stock-still in time to pare back restrictions on casinos to the same degree.”
Wieczynski noneffervescent rates Penn a “buy,” but trimmed his toll forecast to $108 from $124, to reverberate more a to a greater extent conservative posture on the company’s cyberspace casinos exposure and Barstool Sportsbook. The manipulator is aiming to make the mobile betting app unrecorded inwards eighter states by the scratch of NFL time of year and 10 states past the cease of 2021.
Penn Keeping Costs inward Check
As is the caseful with many regional gaming operators, Penn is proving adept at boosting margins against the COVID-19 backdrop. The company estimates long-term perimeter expansion will approach shot 90 percent of 2019 revenue.
Cost management is another dot inwards favour of Penn stock, notes Wieczynski.
“PENN’s client acquisition costs are advantageously to a lower place marketplace rates, patch advantages on customer keeping are potential underappreciated at this arrange of the game,” said the Stifel analyst. “PENN noted their blended CPA is running at a lower place $100/customer, which compares to peers running $300 to $800 at this time.”
While investors may be fretting near the sustainability of Penn’s astral perimeter trends, the analyst says he’s sure-footed that Penn management tin can go the business organisation inward leaner forge even as exact trends issue to pre-pandemic form.