UPDATE: Morgan Stanley Lowers PT on Penn Gaming Following Recent Earnings Report

In a report published Friday, Morgan Stanley analyst Thomas Allen lowered the price target on Penn National Gaming PENN from $13 to $12 following last week's earnings report. Allen lowered 2Q14 estimates by 7% and flexed the bull/bear cases to highlight the high risk-reward of the stock. Penn Gaming remained at Equal Weight. According to Morgan Stanley, "As a result of recent relatively cautious channel checks and PENN's weaker than expected 2014 outlook, we are lowering our estimates (cut 2014e EBITDAR by 8%) and price target for PENN (from $13 to $12). For our base case, the reduction in our FY14 estimates is mainly driven by: i) We believe that we were previously underestimating the cannibalization impact that PENN will likely realize at some of its major properties (Charles Town, Lawrenceburg, and Columbus), ii) We no longer expect a near-term ramp in Columbus given the impact of new supply, and iii) While our regional channel checks suggest flattish same-store growth in 2014,we now assume a relatively conservative 2% y/y same-store decline(excluding properties facing material cannibalization) which more accurately reflects the 1Q weather impact." Last Friday, Penn National Gaming closed at $12.20.