Penn Entertainment (NASDAQ: PENN) shares declined following Bank of America's downgrade to "neutral" with a $22 price target. The downgrade reflects concerns about increasing competition and potential margin pressure in key markets.

Key Factors Behind the Downgrade:

• Revenue and margin pressure expected in Q4 and 2025 due to new casino openings in Iowa/Council Bluffs, Illinois/Indiana, and Louisiana
• Significant capital expenditure: $360 million for Aurora casino relocation and $185 million for Joliet riverboat casino project
• Increased leverage projected to reach 6.3x in 2025, up 50% from 2021 levels
• ESPN Bet's underperformance with only 3% sports wagering market share and 2% iGaming share, below initial projections

Recent Performance:

• Stock up 9.70% since Election Day
• Nearly 14% increase over the past month
• Year-to-date loss reduced to under 19%

Positive Outlook:

• Expected to move past peak leverage and losses
• Potential balance sheet improvement through 2025-2026
• ESPN Bet showing technological improvements that could boost customer acquisition
• $850M capex projects opening in late 2025 and 2026 may provide growth opportunities

The downgrade suggests a balanced risk-reward profile, with near-term challenges in regional casino operations offset by potential long-term growth opportunities and operational improvements.

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