Casino Stock Pops on Revenue Beat, Sunny Outlook

The brokerage bunch is already optimistic towards PENN

Digital Content Manager
Feb 3, 2022 at 10:50 AM
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Penn National Gaming, Inc (NASDAQ:PENN) is up 4.4% at $47.69 at last check, despite the casino operator reporting worse-than-expected fourth-quarter profits of 26 cents per share -- nearly half of the 53 cents per share analysts expected. The company also posted a revenue beat, however, as well as an upbeat full-year revenue forecast.

Analysts are yet to chime in on the event, but have been optimistic towards PENN. Of the 12 in coverage, eight carry a "buy" or better rating, while four say "hold." Plus, the 12-month consensus target price of $69.19 is a whopping 47.6% premium to current levels.

Meanwhile, short sellers have been eyeing the equity. Short interest rose 3% in the last reporting period, and the 9.73 million shares sold short now make up 5.8% of the stock's available float. Should some of these bears start to hit the exits, PENN may surge even higher.

A broader look shows the stock sporting a 50-day put/call volume ratio of 0.48 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 98% of readings from the past year. This means that while calls are still outnumbering puts on an overall basis, the latter are being picked up at a much quicker-than-usual clip. 

Drilling down to today's options activity, 17,000 calls and 6,784 have crossed the tape so far, which is eight times the volume that is typically seen at this point. Most popular is the 2/4 50-strike call, followed by the 48-strike call in the same weekly series, both of which expire at tomorrow's close.

Penn National Gaming stock has been chopping higher on the charts since late January, though overhead pressure remains at the $50 level. Year-to-date, PENN remains down roughly 6%.


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