Bull Notes Push PENN Higher Before Earnings

The stock is climbing back up toward its recent record high

Deputy Editor
Feb 2, 2021 at 10:23 AM
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Penn National Gaming Inc (NASDAQ:PENN) is up 4.4% at $108.59 at last check, after a pair of bull notes in the form of price-target hikes. Stifel, noting that the stock seems compelling long-term despite the casino industry's near-term headwinds, adjusted its price target to $118 from $100. Furthermore, Jefferies raised its price objective to $91 from $74, while expecting little surprise from the company's fourth-quarter earnings, due out before the open on Thursday, Feb. 4. 

Ahead of these earnings, the options pits are pricing in a post-earnings swing of 13.4%, regardless of direction. This is much higher than the average 6.1% move from the company's last eight earnings reports. On the charts, PENN is already trading not too far from its Jan. 25 record high of $111.02.

Options traders have been fiercely bullish. Penn National Gaming stock's 50-day call/put volume ratio of 3.03 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 97% of all other readings from the past year. This shows a strong penchant for long calls in the last 10 weeks. 

Now may not be a bad time to weigh in on these options either, per the stock's Schaeffer's Volatility Index (SVI) of 92%, which stands higher than just 13% of all other readings in its annual range. This implies that options players are pricing in relatively low volatility expectations at the moment. 

Taking a look at sentiment amongst the brokerage bunch, analysts are split on PENN. Of the 14 analysts in coverage, seven carry a "strong buy" rating on the stock, with the remaining seven a "hold" or worse. Meanwhile, the 12-month consensus price target of $97.07, coming into today, is an 10.6% discount to current levels. 


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