Goldman Sachs Calls Penn National Gaming 'Steady Eddy'

Penn National Gaming, Inc PENN reported robust 1Q results, beating expectations.

Goldman Sachs’ Steven Kent maintains a Buy rating on the company, with a price target of $18.

PENN Continues To Execute

The company attributed half the 1Q beat to the leap year and the weather, with the other half being attributed in consumer enhancement.

Kent mentioned that Jamul was on track to being launched in 2H16, while Plainridge continues to ramp.

The analyst also stated that Marquee Rewards had been launched at Tropicana, Las Vegas.

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Estimates Revised

The adjusted EBITDA estimates for 2016, 2017 and 2018 have been raised from $830 million to $844 million, from $849 million to $864 million and from $868 million to $882 million, respectively, following the 1Q beat and the company’s financial restatements.

Kent explained that the EBITDA estimates were now before lease payments.

According to the analyst, the downside risks include “pressure on US regional gaming and increased cannibalization.”