Don’t hold back: Compliments don’t come much more backhanded than in the Deutsche Bank note issued today, which upgrades Penn National to a hold from a sell on the basis of its “massive underperformance” against its regional gaming peers. “Since our downgrade, and after numerous character assassinations, we stuck with our sell rating, because it was based on fundamentals, and ultimately we felt we were right and over time, the fundamentals would prevail.”
Taking advantage: The team pointed out that after Penn became something of a meme stock, the company did “exactly the right thing” and issued ~68m shares, increasing the share count since the pandemic began by around 60%. “However, to steal a recent quote from New York Mets President, Sandy Alderson, the stock promotion proved short lived, as the ‘blowhard in a house of cards’ was unable to keep it together long enough.”
The zinger: And so to Dave Portnoy. The DB team said the Penn share price was driven by an “overhyped sports-betting story”, before adding:
“At present, we believe Penn, the company we covered since 2011, and recommended as a buy from 2011 through January of 2020, is just a sideshow, a sideshow to a wildly volatile, incredibly libelous, and misleading social media front man.”
Calibrate this: In maintaining the price target of $31, the DB team add that they “obviously believe there is risk to the downside” while the upside risk is “hard to calibrate” given the backdrop of “fundamentally baseless stock moves”.
“Net-net, we think this era has been an unfortunate black eye for the gaming industry, and one that we believe most could have seen coming,” the Deutsche Bank team added.
