Penn Entertainment's stock rose 3.90% following JPMorgan's upgrade to "overweight" from "neutral," with an increased price target of $27 from $19, suggesting a 30% upside potential.

JPMorgan analyst Joseph Greff highlighted that while ESPN Bet's success remains crucial for Penn's stock performance, the company's land-based casino operations and market access fees alone could justify a $26 per share valuation. Penn currently operates 43 casinos and racetracks across approximately twelve states.

The company is investing $850 million in facility improvements, including:

• $360 million for Aurora's Hollywood riverboat casino relocation
• $185 million for Joliet riverboat casino shore development
• Various upgrades across Midwest, South, and Nevada properties

These capital expenditures are expected to complete by 2025, potentially improving free cash flow by 2026 and enabling debt reduction. Early signs indicate ESPN Bet is successfully attracting female and younger bettors, though gaining significant market share from competitors like DraftKings and FanDuel remains a long-term challenge.

Should the interactive business underperform, Penn could explore strategic alternatives, including:

• Asset sales of select casino operations
• Potential sale of interactive business
• Merger and acquisition opportunities

Despite previous speculation about a potential takeover by Boyd Gaming, Penn Entertainment appears committed to its current strategic direction, focusing on both traditional casino operations and digital gaming expansion.

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