Penn Entertainment upgraded at Craig-Hallum on M&A and activist interest

As previously reported, Craig-Hallum upgraded Penn Entertainment to Buy from Hold with a price target of $30, up from $20. The firm, which notes it has been critical of the company’s capital allocation and “overpromising/underdelivering in Interactive,” adds that it has “always argued there were highly valuable assets and significant stock upside potential” and it now sees recent activist involvement and M&A rumors providing a floor on valuation. The firm, which thinks the company’s retail casino assets are worth $30 per share and sees another $15 per share potential from either M&A or success with ESPN Bet, argues that M&A and activist potential, along with “a steady cadence of potential fundamental catalysts,” present “a compelling risk/reward opportunity.”