PENN Entertainment Inc (NASDAQ:PENN) has struggled since 2021 as some analysts have increasingly preferred competitors such as Draft Kings Inc (NASDAQ:DKNG) in the race to acquire new customers.

However, one analyst remains optimistic that PENN's partnership with ESPN can spur growth exceeding Wall Street estimates.

The Penn Analyst: Needham analyst Bernie McTernan reiterated a Buy rating on Penn with a $26 price target. McTernan has been bullish on PENN since 2021.

The Penn Takeaways: McTernan highlighted the importance of PENN's continued integration with the Walt Disney Co (NYSE:DIS)-owned ESPN.

"Embracing a content-driven customer-acquisition strategy, partnering with ESPN, the leading sports media company in the US, should provide better footing for market share gains relative to their prior strategy with Barstool," McTernan said in the Wednesday note. "We think PENN can continue to leverage their omnichannel strategy helping their regional and digital footprints."

PENN acquired Barstool Sports through transactions in 2020 and 2023 to get a foothold in the sports betting business. In August 2023, PENN sold their stake in Barstool back to founder Dave Portnoy for $1 after rebranding Barstool Sportsbook to ESPN Bet.

McTernan is optimistic that PENN can leverage ESPN's brand in future marketing efforts. He noted that PENN has performed well in North Carolina after the launch of online sports betting in the state despite restraint in marketing spend. The analyst indicated that the company can similarly leverage ESPN's brand in the future.

Price Action: PENN traded at $15.93, down 5.77% on the day at the time of publication.

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