If you’re in a betting mood, the U.S. gambling sector is buzzing with the news of a possible merger between PENN Entertainment (NASDAQ: PENN) and its rival Boyd Gaming (NYSE: BYD). PENN's stock jumped nearly 10% following reports that Boyd is exploring a merger, potentially creating an $8 billion gambling powerhouse. If this deal goes through, it will mark the largest in the U.S. gambling industry since 2020, when Eldorado Resorts purchased Caesars Entertainment. However, the path to completion is fraught with challenges. Boyd would need to secure significant financing, and the merger would require multiple states to give their regulatory blessings.
What Is Penn Entertainment?
Founded in 1972, Pennsylvania-based PENN Entertainment takes an omni-channel approach with racetracks, casinos, and online gaming platforms. The company operates 43 gaming properties in 20 states, including New Jersey, Ohio, Missouri, and, of course, Pennsylvania. Its brands include Ameristar, Hollywood Casino, and Boomtown. PENN also runs iCasino and online sports betting. A key consideration is Penn's existing partnerships, especially its $1.5 billion licensing agreement with Disney to use the ESPN brand for its sportsbook (a website or facility that accepts sports bets). This deal adds another layer of complexity to the potential merger. Why merge now? Penn's stock has struggled in 2024, down 23% year-to-date, and without further developments, this negative trend may persist.
What Wall Street Analysts Say
Investors should approach this merger news cautiously, as the market's reaction is based on potential negotiations rather than a concrete offer. Even so, analysts are moderately upbeat with a consensus Buy rating from firms like Jefferies, Wells Fargo, Barclays, and Morgan Stanley. The 12-month consensus price target is $22.47, with a high estimate of $30. Shares on Monday were trading just under $20, up .73%. Of the two companies, analysts actually prefer Boyd Gaming (BYD), also a Buy, with an average price target of $71.89 and a high of $80. BYD shares are currently trading at $55.23, up 2.6%.
Neither Julie Stoller nor Stocks.News have positions in this company.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...