PENN Entertainment, Inc.: 2Q26 Takes; Core Beat/Raise Suggests PENN Still Has Gas In The Tank; Reaffirm OW, PT $27 (+$1)

Research evidence excerpt

J P M O R G A N

North America Equity Research

06 August 2026

PENN Entertainment, Inc.

2Q26 Takes; Core Beat/Raise Suggests PENN Still Has

Gas In the Tank; Reaffirm OW, PT $27 (+$1)

Overweight

PENN, PENN US

Price (05 Aug 26):$19.62

▲Price Target (Dec-27):$27.00

Prior (Dec-27):$26.00

PENN had a strong 2Q report, beating and raising its FY land-based EBITDAR

guidance, and meeting/maintaining its 2Q/FY Interactive guidance, despite

unfavorable hold. PENN’s core competency is regional gaming, and there, it’s

outperforming and outgrowing peers; 2Q EBITDAR was +6% y/y (margins

+55bps, flow through 50%), and looking ahead, guidance implies 2H26

EBITDAR should also grow 6%, w/ potential upside as recent projects ramp (e.g.,

Joliet, Aurora, M, Columbus). For Interactive, we think PENN is executing well

and flexing its cost base as needed (FY rev trimmed, EBITDAR maintained), but

view this more as a “check the box” part of the story than central to the investment

thesis. We think fears on PENN making a property acquisition are misguided, as

the company has a strong track record of accretive land-based M&A (e.g.,

Pinnacle, Greektown). With FCF/sh of $3+ implying a high-teens yield, solid

underlying trends, and potential upside to 2H, we stay OW, with our $27 PT (+$1)

implying ~35% upside.

Conference call takes. (1) PENN has identified three new projects it could

embark on (one hotel; two landside conversions), and would expect to phase

one project at a time; (2) Capital allocation: focus will continue to be delevering to <5x lease-adj net levg (<2x /traditional) by early-27; subsequently,

we would not be surprised to see PENN consider share repo. (3) Mgmt. noted

iGaming growth (+2% y/y) was impacted by lower OSB engagement, but it’s

seeing strong direct casino acquisition and attractive CACs (particularly for

Hollywood standalone). (4) OSB hold was ~$3m unfavorable y/y.

Details on updated FY26 guide. Land-based: Revs $5.875b (+$75m vs prior)

and EBITDAR $1.963b (+$31m vs prior), which reflects ~$20m of 2Q upside

and ~$10m from strong 3QTD trends/favorable outlook. Mgmt. noted 2Q

momentum carried through July, doesn’t see 1H as the high point for regional

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