Penn National Gaming shares got a buy rating from a Needham analyst who initiated coverage of the online gambling company on Tuesday.
Analyst Bernie McTernanat set a $151 price target on the shares. The analyst said that the risk-reward balance was compelling.
Needham views the North America gambling market as an emerging $35 billion opportunity. McTernanat suggested that the market is still in its nascent stages, with only 25% of the population having access to online sports betting and 10% with access to iGaming.
"We are bullish on the online sports betting and iGaming total addressable market in the U.S. and see the potential for Penn to take significant, profitable market share on the strength of Barstool's differentiated content-driven customer-acquisition strategy," analyst Bernie McTernan said in a report.
The analyst also noted that PENN spends significantly less than peers on external marketing, and that the company will be a net recipient of market access fees in roughly half of the U.S. where it has a regional casino, vs. online-only peers who are net payers.
Needham also initiated coverage of sports-betting company DraftKings with a buy rating and $81 price target. The Investment firm also added it to its Conviction List. According to Needham, DraftKings is a leader in the North America online gambling market.