Tag: fundamentals

01
Oct
2020
Posted in internet

Penn National will nosedive 57% as weak fundamentals overshadow ‘internet meme’ rally, Deutsche Bank says



Getty Images / Cliff Hawkins


© Getty Images / Cliff Hawkins
Getty Images / Cliff Hawkins

  • An influx of retail-investor interest in Penn National Gaming¬†boosted shares too far, too fast, Deutsche Bank said Thursday.
  • The bank’s analysts lifted their price target for Penn National Gaming shares on Thursday to $31 from $22, implying a 57% plunge over the next 12 months.
  • While Penn National’s improvements to operating costs show promise, the stock has transformed “into an internet meme of sorts” without the fundamentals to support its rally, the analysts said.
  • Few states are interested in passing online gambling legislation, and the company’s total addressable market is smaller than bullish investors realize, they added.
  • Watch Penn National trade live here.

Penn National Gaming shares are up more than 800% from their mid-March trough, but Deutsche Bank doesn’t think the rally will hold.

Analysts Carlo Santarelli and Steven Pizzella raised their price target to $31 from $22 on Thursday, implying shares will tumble 57% over the next 12 months from Wednesday’s close. The bank reiterated its “sell” rating for Penn National and cited improved operating costs for the target bump.

The casino and sports-betting company’s surge was fueled by retail investors who turned the stock “into an internet meme of sorts,” the team wrote in a note to clients. Penn National’s partnership with Barstool Sports garnered interest from casual investors earlier in the year, but the recent influx of inexperienced day-traders drove extraordinary momentum.

Barstool founder and day-trading streamer Dave Portnoy frequently backed the stock to his millions of online followers, further fueling the summer frenzy.

Read more: US Investing Championship hopeful Evan Buenger raked in a 131.9% return through August. He shares the distinct spin he’s putting on a classic trading strategy that’s led to his outsized returns

Institutional investors quickly followed the retail crowd