UPDATE: Bank of America Lowers Penn National Gaming Rating on Eroding Market Fundamentals

In a report released Monday by Bank of America, analyst Shaun Kelly downgraded

from Buy to Underperform, lowering price objective from $17 to $10. The reason for the downgrade, according to the report stems from harsh weather conditions, reduced gaming traffic trend in the region, and cannibalization through more casino openings. With the constant stream of cold weather due to the Polar Vortexes, gaming across the northeast and mid-west were hit hard and the trend is continuing through January. The report also notes, "PENN's average property showed a -9.7% sales decline in the fourth quarter with two of PENN's largest properties, Charles Town WV and Lawrenceburg IN each reporting declines more than twice that magnitude. Looking forward, we do expect those declines to moderate. However, as most cannibalization takes at least a year to burn through we are now estimating a -5.7% average property revenue decline for the full year 2014" Kelly highlighted a possible risk in their evaluation, "The key risk to our call is if PENN wins the Massachusetts slot parlor license and the right to build a temporary facility there. We remain positive on this opportunity and think it could be worth up to $3/PENN share if they are selected. The final decision is set for Feb. 28th." PENN is trading down nearly 3.5% from its Monday close of $11.58 to around $11.18.