In the blockbuster deal, ESPN will license its name to casino and sports betting operator Penn Entertainment in a deal worth $1.5 billion over 10 years. Penn Entertainment is trading one sports media brand as a betting partner (Barstool Sports, which was sold back to founder Dave Portnoy for $1) for one with an even bigger name, cable sports giant ESPN. While taking a huge loss on the Barstool Sports investment, the company hopes the deal will give a huge upgrade to its gambling business. The strategic partnership should provide Penn with access to ESPN’s audience of 370 million across all social platforms, 105 million monthly unique digital users and 25 million ESPN+ subscribers.
Penn Entertainment stock has a $44 target price at Needham. The consensus target is $33.56, and the shares closed at $22.83 on Thursday.
Wynn Resorts
This opulent casino company is the high-end of the industry and offers very solid long-term growth potential. Wynn Resorts Ltd. (NASDAQ: WYNN) designs, develops and operates integrated resorts. The company operates through the following four segments.
The Wynn Palace segment operates private gaming salons and sky casinos; a luxury hotel tower with suites and villas, including a health club, spa, salon and pool; food and beverage outlets; retail space; meeting and convention space; and performance lake and floral art displays.
The Wynn Macau segment operates casino space with private gaming salons, sky casinos and a poker room; a luxury hotel tower that includes health clubs, spas, a salon and a pool; food and beverage outlets; retail space; meeting and convention space; and Chinese zodiac-inspired ceiling attractions.
The Las Vegas Operations segment operates casino space with private gaming salons, a sky casino, a poker room and a race and sports book; a luxury hotel tower with suites and villas, including swimming pools, private cabanas, full-service spas and salons, and a wedding chapel; food and beverage outlets; meeting and convention space; retail space; and theaters, nightclubs and a beach club.
The Encore Boston Harbor segment operates casino space with gaming areas and a poker room; a luxury hotel tower with a spa and salon; food and beverage outlets and a nightclub; retail space; meeting and convention space; and a waterfront park, floral displays and water shuttle service.
The $150 Stifel price objective is a Wall Street high. The consensus target is just $127.57. On Thursday, Wynn Resorts stock closed at $94.79 a share.
With 37 states now having legalized sports gambling, the huge potential for the total addressable market is more than enough reason for investors with a solid risk appetite to add one or all these stocks to growth portfolios. The NFL and college football seasons will be huge for all these companies. While the betting handle and action will not pick up in earnest until the regular NFL season starts and college football kicks off, when it does it is just a few weeks it will be a Tsunami of incoming action on countless straight and proposition bets.
It is important to remember this gambling axiom: They don’t build those big casinos in Las Vegas because the house loses.
Originally published at 24/7 Wall St.
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