David Katz, an analyst at Jefferies, raised the price of Penn National Gaming shares (NASDAQ:), to Buy from Hold and set a target price of $49.00 per share.

The basis for the upgrade call lies in the recent weakness, said Katz, with the current valuation comfortably reflecting “the stable cash generation of the land-based casino business (

“At present levels, the shares are trading at 6.7X EBITDAR and 9.6X FCF on 2023 estimates, which suggests the market is either pricing in a recession or assigning no value to the company’s digital and media assets. In either case, we believe the shares should trade at higher levels,” Katz said in a client note.

Analyst is positive also about the future of digital business. This is expected to lead to higher returns in the long-term.

“We believe any value creation from digital and media is incremental to current levels and could potentially drive upside. Barstool/SCR shares are $14 each. It is based upon 8% market share, 30 percent margin, and a discount of 14% starting 2025. Media value is also included on revenue of $200M, which has been discounted from 2025. The result is incremental $17 per share to our $32 per share land-based value for a target of $49,” Katz concluded.

Today, Penn stock prices are up by 1%

By Senad Karaahmetovic