PENN Entertainment, Inc. (PENN) made waves at its investor event in Las Vegas, outlining a positive outlook for the third quarter. The company expects retail operations adjusted EBITDAR to fall within the range of $465 million to $475 million, while its interactive division is projected to see a smaller loss than previously anticipated. This improvement stems from strategic enhancements to its products and a reduction in promotional spending, according to Penn.
Analyst Bernie McTernan of Needham highlights the significance of PENN’s year-over-year improvement in its parlay mix, which is boosting hold thanks to recent product updates. The robust performance in Ontario serves as a strong indicator of the potential upside from combining sports betting with media. McTernan further emphasizes the upcoming integration with ESPN in November, which he believes will be a critical driver of growth. By leveraging ESPN’s massive user base, PENN expects to reduce customer acquisition costs and boost retention and engagement.
While PENN’s preliminary third-quarter results show a lower Property Adjusted EBITDAR, the expected loss for Interactive operations has been reduced. Looking ahead, McTernan notes that the 2025 estimates for Interactive EBITDA are more optimistic than the consensus but slightly below their own forecast, while 2026 expectations align with their projections.
Based on these positive developments, McTernan has maintained a Buy rating for PENN stock, with a price target of $26. PENN shares were up 1.21% at $18.80 at the last check on Tuesday.
