A day after the gaming firm announced the termination of its ESPN Bet contract, shares of Penn Entertainment (NASDAQ: PENN) are once again expected to decline on Friday. However, at least one analyst thinks the regional casino stock is ready to rise.

Stifel analyst Jeffrey Stantial raised his price objective for shares of the Ameristar operator from $19 to $21, indicating a nearly 50% increase from current levels, and upgraded them from "hold" to "buy" in a note to clients. He claims that the stock no longer has a "overhang" as a result of Penn's decision to sever ties with ESPN. The news was made by the gambling firm on Thursday, well in advance of the August 2026 deadline that many had anticipated.

"We see room for shares to grind steadily into the $20s with an attractive near-term catalyst path still left: 1) annualization of new competitive casino openings & resulting brick-and-mortar inflection, 2) proof points of attractive return on project spend, 3) steady iCasino share ramp potentially accelerated by re-allocated financial/operational resources, and 4) Interactive asset monetization optionality,” wrote the analyst.

In the current quarter, Penn is paying ESPN $43.1 million to discontinue their connection, with the former anticipating non-cash charges of around $14 million linked to equity warrants granted to Walt Disney (NYSE: DIS) as part of the initial agreement.

ESPN Bet Gone Could Pay Off for Penn Stock

Penn has no plans to completely abandon online sports betting (OSB). Instead, its platform will switch to theScore brand, which is anticipated to act as a funnel to possibly drive users to the operator's successful Hollywood Casino iGaming app.

Hollywood Casino's recent standalone fashion debut, according to Stantial, is on a strong ramp-up trajectory, suggesting a "likely multi-year runway on product improvement and omnichannel execution." Since the operator's sports betting activities have undoubtedly hurt the company, it's possible that Penn will refocus its narrative and persuade investors to invest now that ESPN Bet is out of the way.

“Despite improving brick-and-mortar and iCasino fundamentals, shares are -26% year-to-date (vs. peers -8% on average), now just +2.5% off trailing five-year lows, which we attribute primarily to overhang from ESPN Bet and fears of further loss-making beyond the late-26 opt-out option,” notes Stantial. “With this key overhang now removed, we think investors can more cleanly own PENN into the forthcoming, incrementally de-risked, free cash flow (FCF) inflection which we view as excessively discounted at current levels (21% FY27 FCF).”

He also reaffirmed the belief that Penn might try to make money off of the Score's Canadian operations, which it acquired four years ago for $2 billion in stock and cash. According to the analyst, Penn's interactive approach that prioritizes iGaming makes the Canadian operations "noncore."

Penn Stock Removes Albatross

Penn has invested billions of dollars on OSB initiatives over the last few years, but has seldom seen any results. Despite the advantages of ESPN branding, the company was never able to pose a serious threat to established sector players' market dominance.

Penn's ostentatious but misguided actions caused investors to view the stock as a sports betting brand, drawing focus away from the company's strong regional casino operations. This includes positive outcomes in Joliet, Illinois, where the operator recently improved its hotel and casino.

“We see PENN as comparatively well-positioned given geographic diversification, well-documented operating prowess, and relatively higher quality assets enabling PENN to compete primarily on product,” concludes Statnial. “We also see an attractive pipeline of growth projects in Retail, with proof points of return on Joliet potentially improving sentiment on the broader pipeline.”