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Truist isn’t sold on Penn Entertainment’s partnership with ESPN. The firm downgraded the gaming stock to hold from buy on Wednesday with a $3O per share price target, down from $33. Truist’s new forecast now implies about 11% upside from Wednesday’s $27.10 close. The company made headlines this week after announcing a deal with Disney’s ESPN to relaunch its sports betting app as ESPN Bet . Penn will do away with the Barstool Sportsbook and divest Bartstool as part of the deal. Penn management told investors on its earnings call that the company expects to launch the app in the middle of the 2023 NFL season. But Truist analyst Barry Jonas said traders still need time to “digest” the news. “PENN’s upside from ESPN Bet could be material, though we see sizable execution risks that may not resolve soon – while land based trends just look stable. With even mgmt admitting they’re a show-me story, we advise waiting before adding to positions,” Jonas said. Jonas noted certain stipulations tied to the Disney deal, which he said can be terminated after three years, although executives haven’t yet detailed the provision. “Shorter-term, PENN mgmt thinks they’re at least a year behind on the inflection to profitability with DKNG and others profitable this quarter,” the analyst added. Penn Entertainment stock has slipped nearly 9% from the start of the year. PENN YTD mountain Penn Entertainment stock has pulled back 8.75% from the start of the year. — CNBC’s Michael Bloom contributed to this report.
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