Penn Entertainment (PENN) Stock Forecast & Price Target

PENN Entertainment's stock outlook is bolstered by significant growth in its interactive segment, which is projected to achieve a +20% year-over-year increase in fiscal year 2025, contributing to robust overall revenue performance. The company benefits from a strong retail portfolio that generates mid-30s EBITDAR margins and enhances positioning for licenses in digital wagering markets, along with a well-established mychoice customer loyalty program that engages over 25 million members. Furthermore, recent product enhancements and the successful launch of the Hollywood iCasino app indicate strong momentum in gaining market share, which could further improve overall performance and profitability.

Penn Entertainment's stock has experienced a significant decline of 30% over the past two years, primarily due to competitive market pressures, rising interest rates, and a lackluster performance in its Interactive segment, which has led to suppressed free cash flow (FCF) expectations, projected to reach only $2 per share in 2026 and $4 in 2027. The company's fourth-quarter earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $321 million fell 1% short of consensus estimates, with poor outcomes in sports betting leading to reduced revenues and an adjusted EBITDA loss of $110 million in the Interactive segment. Key risks further contributing to a negative outlook for Penn include difficulties in profitably scaling the Interactive business, an uncertain economic environment, and the potential for increased competition and regulatory challenges that could adversely affect profitability.