PENN Rallies 9% as Analysts Lift Targets

PENN Entertainment surged 8.8% this week to $17.24 as four major firms raised price targets following recent earnings. Short interest ticked up 2% to 16.2% of float while options sentiment turned bearish.

Price action & positioning

PENN closed at $17.24 on April 24, down 0.1% on the day. The stock rallied 8.8% over the past week and climbed 19.1% over the month. Shares have recovered from mid-March lows and are trading near recent highs.

Short interest & lending

Short interest stands at 21.5 million shares, or 16.2% of float. The position increased 2.1% over the past week and 1.4% over the month. Short interest hit a 30-day high on April 23, matching levels last seen in early April.

Cost to borrow sits at 0.50%, down 13% from a week ago. CTB spiked to 1.17% on March 23 before retreating to current levels. Utilisation reached 12.1% on April 23, up from 10.0% the prior day. This marks the highest reading since April 8. Utilisation remains well below the 52-week high of 30.7%.

Options flow

Put-call ratio registered 0.39 on April 24, below the 20-day mean of 0.43. The z-score of -1.18 indicates moderately bearish sentiment relative to recent norms. PCR sits well above the 52-week low of 0.28 but far below the high of 0.55. Call volume has outpaced puts over the past week as the stock rallied.

Analyst consensus

The average price target sits at $20.17, implying 17% upside from current levels. Four analysts raised targets on April 24 following the earnings event.

Barclays analyst Felicia Hendrix lifted her Overweight-rated target from $23 to $24. Mizuho's Ben Chaiken raised his Outperform target from $22 to $23. JP Morgan's Daniel Politzer bumped his Overweight target from $22 to $23. Stifel's Jeffrey Stantial increased his Buy rating target from $22 to $23.

Earlier in April, three more firms raised targets. JP Morgan lifted to $22 from $21 on April 16. Barclays increased to $23 from $22 the same day. Wells Fargo's Trey Bowers raised his Equal-Weight target from $16 to $18.

Valuation & factor positioning

The P/E ratio stands at 13.7, up 1.8 points over the past month. Price-to-book reached 1.11, climbing 0.18 over 30 days. EV/EBITDA sits at 7.0, rising 0.16 over the month. The stock trades at 1.26 times sales, up 0.03 over the period.

PENN ranks in the 96th percentile for 90-day EPS momentum and the 76th percentile for 30-day EPS momentum. The stock sits in the 21st percentile for EPS surprise. Short score ranks in the 16th percentile. Dividend score lands in the 66th percentile despite the company paying no dividend.

Institutional positioning

Vanguard added 177,088 shares in Q1 to reach 14.3 million shares, or 11.3% of the company. BlackRock increased its stake by 53,012 shares to 15.4 million, representing 12.1%. Invesco lifted holdings by 92,722 shares to 4.9 million.

AQR Capital Management made a major move, adding 3.1 million shares to reach 3.5 million shares, or 2.7% of the company. Armistice Capital added 992,334 shares to reach 3.1 million shares.

HG Vora Capital trimmed its position by 1.0 million shares but still holds 6.25 million shares, or 4.9%. Greenlight Capital cut 725,000 shares to 6.0 million shares, or 4.8%. Arrowstreet Capital slashed 1.8 million shares. Managed Account Advisors reduced holdings by 651,558 shares.

Insider activity

Insiders showed net buying of 238,801 shares over the past 90 days, valued at $3.5 million. Director Jane Scaccetti purchased 8,000 shares at $15.09 on March 2, spending $120,720.

CEO Jay Snowden sold 108,063 shares at $14.70 on March 10, generating $1.6 million. The same day he received an award of 92,968 shares. On January 2, Snowden sold 41,073 shares at $14.85 for $609,934.

CFO Felicia Hendrix sold 17,133 shares at $12.54 on February 26 for $214,848. She received an award of 24,627 shares the same day. Chief Strategy Officer Christopher Rogers sold 7,070 shares at $12.54 on February 26 for $88,658 after receiving an award of 14,404 shares.

What to watch

PENN reports earnings on May 7 at 11:00 AM. The stock's reaction to recent prints has not been captured in the available historical data.