Penn Entertainment shares rose 3.90% following JPMorgan's upgrade of the gaming stock to "overweight" from "neutral," with an increased price target of $27 from $19 - suggesting roughly 30% upside potential.

While ESPN Bet remains crucial for Penn's stock performance, JPMorgan analyst Joseph Greff highlighted that the company's land-based casino operations and market access fees alone could justify a $26 per share valuation. Penn currently operates 43 casinos and racetracks across approximately 12 states, making it the nation's largest regional gaming operator.

The company is undertaking an $850 million capital improvement program across its properties, including:

• $360 million to relocate the Hollywood riverboat casino in Aurora, Illinois
• $185 million to move another riverboat casino ashore in Joliet
• Various other property enhancement projects

These investments are already showing positive returns and could generate double-digit ROI long-term. With major expenditures expected to conclude in 2025, Penn's free cash flow outlook for 2026 appears promising, potentially allowing for debt reduction and decreased interest expenses.

While ESPN Bet shows encouraging signs in attracting female and younger bettors, competing with established players like DraftKings and FanDuel remains a long-term challenge. Should the interactive business underperform, Penn has several strategic options available, including:

• Potential asset sales
• Casino operating rights divestment
• Sale of its interactive business
• Corporate merger opportunities

Earlier speculation about a potential acquisition by Boyd Gaming did not materialize, and Penn appears committed to its current strategic direction.

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