Goldman Sachs just put a fresh buy rating on Penn Entertainment (PENN), and the timing is notable. The investment bank initiated coverage Friday with a $26 price target — implying 23% upside from Thursday’s close — citing an “inflection point” in the regional gaming sector driven by new casino projects and a turnaround in Penn’s interactive betting operations. The call comes as PENN shares are already up 43% year-to-date, but Goldman analyst Lizzie Dove argues the run isn’t over. Penn operates dozens of casinos and racetracks across the U.S. and has been investing heavily in digital gaming to complement its brick-and-mortar cash flows.
Goldman’s bullish case rests on two concrete pillars. First, the broader regional gaming sector is in clear growth mode — U.S. commercial gaming revenue grew 7.2% in the third quarter of last year, more than double the country’s 3.9% GDP growth over the same period. That macro tailwind is real and likely to persist. Second, Penn is on track to generate recurring free cash flow of more than $4 per share by 2028, giving the stock a meaningful yield floor even at current elevated prices. The key pivot is Penn’s interactive segment — its online sports betting and iGaming operations, which have historically been a drag on profitability. Dove says that unit is now “turning a corner,” which is exactly the catalyst the market has been waiting for. If Penn can prove out digital profitability while growing its physical venues, the risk/reward profile shifts significantly.
For retail investors, the decision comes down to valuation and patience. PENN currently trades at a significant discount to pure-play online gambling peers, which command far higher revenue multiples, yet it offers the stability of established brick-and-mortar cash generation. Goldman’s $26 target represents a reasonable entry point for investors who believe regional gaming can sustain its momentum — particularly if online sports betting continues to expand state-by-state across the U.S. The main risks to watch are consumer spending softness if the economic outlook deteriorates, plus any regulatory friction in Penn’s key markets. But for investors looking for a gaming name with both a value floor and a digital growth kicker, PENN is now on Goldman’s buy list at 23% implied upside.
