ESPN BET may be in a better position than many think.
Investment banking firm Truist Securities has released a revised outlook on PENN Entertainment, raising its target share price from $23 to $25. In addition, the company suggested that PENN’s sports betting app, ESPN BET, is undervalued by the market.
Truist analysts Barry Jonas, Patrick Keough, and Ramin Robhany highlighted ESPN BET’s revamped parlay product and ESPN Fantasy app integration as significant features that are often overlooked.
“As we outlined in our recent upgrade (and now supported by activist letters), we think the market is undervaluing the company,” the analysts wrote.
PENN launched ESPN BET in November after purchasing the rights to the ESPN name from The Walt Disney Company.
In the report, Truist analysts highlighted ESPN BET's strategic importance within Disney's direct-to-consumer strategy. Truist also praised plans for deeper integration between Penn and Disney, suggesting that such efforts could unlock additional value for the sports entertainment company.
“We see ESPN BET as a core tenant of DIS’ ESPN DTC strategy, and are encouraged by both companies’ commentary about deeply integrating the two,” the analysts noted. “While the market is hesitant to give PENN value for ESPN Bet today, we think the more integration work done ultimately drives more value to PENN.”
This isn't the first time Truist has revised its outlook on PENN Entertainment. In April, the firm upgraded its rating from ‘Hold’ to ‘Buy,’ citing similar reasons. Despite recent challenges in PENN's first-quarter results, Truist remains optimistic about ESPN BET's long-term prospects.
