Penn Entertainment (NASDAQ: PENN) has increased by 10.46% during the last ninety days in a somewhat modest manner.  The local casino operator may see further growth, according to at least one analyst.

Morningstar analyst Dan Wasiolek estimated Penn's fair value at $22, indicating an increase of more than 10% from the stock's current price, citing improvements at select local casinos and online betting.  He is supportive of the operator's efforts to renovate a number of its gambling establishments.

"We also think a handful of development projects across its regional portfolio over the next few years stands to improve the company’s competitive standing,” observes Wasiolek. “The first of these projects was the opening of a relocated land property from a riverboat location in Joliet, Illinois, in August 2025. This is followed by two projects scheduled to open in the first half of 2026.”

At a time when Illinois gaming income is increasing, Penn is expected to benefit from the recent opening of a land-based casino in Joliet, Illinois, and the early 2026 opening of the renovated Aurora, Illinois, site.  The casino business said earlier this month that its $206 million, 384-room expansion at Henderson, Nevada's M Resort will open to the public on December 1.

The Stock of Penn Entertainment May See an Interactive Increase

Some in the financial world are still concerned about Penn's ESPN Bet division, with some viewing the current football season as a critical time for the sports betting app.

However, data shows that Penn's Hollywood iGaming platform is making remarkable progress in the higher margin online casino sector, and Wall Street believes that ESPN Bet enters the 2025 football season on a solid basis.  According to Wasiolek, Penn's online betting endeavors will increase the operator's earnings before interest, taxes, depreciation, amortization, and restructuring or rent expenses (EBITDAR).

“Penn is positioned to benefit from the multi-billion-dollar sports betting and iGaming market, aided by further integration with the ESPN franchise, as well as the addition of parlay products and a dedicated iGaming app launched in early 2025,” adds the analyst. “We expect the company to maintain a mid-single-digit percentage revenue share and expect profitability in 2026, with EBITDAR margins ramping to the low-20s by the end of the decade. We forecast for 29% of the company’s total sales to be generated from its interactive business by 2029, a meaningful lift from 14%-15% in 2024.”

Similar to competitors Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), Penn operates both online and offline.  Wasiolek thinks Penn can use its physical casinos to its advantage in the long run.

Strong in a Tough Environment: Regional Casinos

Penn's sole gaming location in the Las Vegas area is the previously mentioned M Resort.  These days, that lack of visibility is advantageous since less people are visiting the Strip, and some analysts worry that this negative trend may eventually affect casinos that cater to Las Vegas residents.  In summary, Penn's lack of familiarity to Las Vegas is advantageous in this setting.

"Amid economic uncertainty, Penn’s drive-to casino locations and digital businesses are performing well,” notes Wasiolek. “We see revenue growth continuing as the company launches several noteworthy products over the next several quarters. We think 2026-28 sales growth can average 7%, fueled by new products.”

Because the South is a more competitive area where the operator must deal with fresh offerings from competitors, the Morningstar analyst is more positive about Penn's Midwest portfolio.