Casino company PENN Entertainment Inc (NASDAQ:PENN) launched the ESPN Bet sports betting platform earlier this week, which comes thanks to a licensing agreement with Walt Disney Co (NYSE:DIS).

Here's one analyst's early reaction to the betting platform and what it could mean for Penn stock.

The Penn Analyst: Needham analyst Bernie McTernan has a Buy rating on Penn and a price target of $33.

Related Link: Disney CEO Bob Iger Says ESPN Bet Had Multiple Suitors. Here's Why Penn Entertainment Won The Rights.

The Analyst Takeaways: ESPN Bet is the top app for the entire iOS app store, McTernan noted in an initial take on the betting platform.

"We thought it would be the top sports betting app, but top in the whole app store is higher than expected," McTernan said.

The new sports betting platform also had two promotional offers to land new customers, which include $200 in bonus bets and up to a $1,000 deposit match.

"The new customer promotion is unlikely to disrupt the current benign competitive environment, which we view as a positive for DKNG and the rest of the industry."  

The analyst, who had a Buy rating and price target of $50 on DraftKings Inc (NASDAQ:DKNG), gave the edge to DraftKings on the product side as well.

Thanks to the licensing deal with Disney, ESPN Bet is expected to have integration with the ESPN brand across digital and traditional media.

"It's early but live sports broadcast integration on ESPN and digital integration is underwhelming thus far in our view."

The analyst watched a Wednesday night NBA game and did not hear ESPN Bet mentioned the entire game.

"We received a push notification on the media app promoting ESPN Bet and there is a betting section of the media app. However, at this point the integration is below our expectations."

McTernan also noted ESPN Bet could be the first sports betting platform to offer NFL betting on "no touchdown," the inverse of the popular anytime touchdown bet for specific players.

"We have not seen this market before."

The analyst predicted a $40 billion total addressable market for online sports betting and iGaming in the U.S. with Penn one of several players that can capture market share.

"Partnering with ESPN, the leading sports media company in the US, should provide better footing for the market share gains relative to their prior strategy with Barstool. We think Penn can continue to leverage their omnichannel strategy.

PENN Price Action: Penn shares are down 0.61% to $24.51 on Friday versus a 52-week trading range of $18.35 to $37.92. Shares of Penn are down 16% year-to-date in 2023, but have gained 19% in the last month likely helped by the highly anticipated launch of ESPN Bet.

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