What’s going on with Penn Entertainment stock on Thursday?

Penn Entertainment Inc (NASDAQ: PENN) is up nearly 10% on Thursday following a report that Boyd Gaming Corporation (NYSE: BYD) is interested in buying the sports content and gambling company. 

Penn stock is still down some 20% versus the start of 2024. 

Boyd has approached Penn Entertainment

Anonymous sources told Reuters this morning that Boyd has already approached Penn Entertainment over a possible takeover. 

It is, however, uncertain whether the entertainment firm will initiate formal discussions with Boyd Gaming. Note that Penn will need approval from Disney as well to move forward with such a merger as it’s currently in partnership with ESPN. 

Neither Boyd nor the Walt Disney Company has so far commented on the news. 

Report of Boyd Gaming’s interest in taking over Penn Entertainment doesn’t seem to be sitting well with its investors considering shares of the $5 billion company based out of Las Vegas, Nevada are in the red at writing. 

Activist investor Donerail has a stake in Penn

The Reuters report arrives only weeks after activist investor Donerail Group said Penn Entertainment could double its share price if it puts itself in the market for a potential sale. 

The news alone helped Penn stock gain some 20% on May 31st. It also made CNBC’s David Faber speculate that the integrated entertainment firm will likely attract some takeover interest following the Donerail news. 

I’m definitely hearing that there is some stuff around. Will see if anyone actually comes to the fore with a bid. Could there be interest from Boyd? Could there be interest from some other names that are out there?

Last month, Boyd named Michael A. Hartmeier to its board as well. Hartmeier has extensive experience in investment banking. 

Is Penn stock worth buying in 2024?

In May, Penn Entertainment reported its financial results for the first quarter that fell short of Street estimates. Still, Jay Snowden – chief executive of the Nasdaq listed firm said at the time:

ESPN BET continues to drive strong top of funnel demand due to the read and affinity for the ESPN brand, which led to record online sports betting handle and iCasino gross gaming revenue in the quarter.

Analysts at Truist Financial also remained bullish on Penn shares despite a weaker Q1. In a recent note to clients, they raised their price target on the entertainment stock to $25 that translates to about a 25% upside on top of today’s gain. 

Penn Entertainment Inc does not, however, pay a dividend at writing. 

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