Shares of the Wyomissing, Pa., company at last check were 5.7% higher at $106.13.
Analyst Benjamin Chaiken said in an investors note that he based his rating on factors including Penn National's pandemic-related savings, where the company reformatted its business during the coronavirus shutdown, incrementally widening its margins.
"We see meaningful opportunities for cost savings from the Pinnacle Entertainment acquisition, savings realized during covid-19 shutdowns, and unique opportunities such as cashless gaming," Chaiken said.
On Tuesday, Penn National said the Michigan Gaming Control Board had approved its application to offer online sports wagering and iCasino products in the state.
The company said it planned to launch its Barstool Sportsbook mobile app on Jan. 22.
Penn National has a 36% equity stake in Barstool Sports.
Chaiken said he was bullish on the broader online-sports-betting space and iGaming markets in the U.S. He pegs the combined total addressable market at approaching $40 billion.
"Beyond this," he said, "we think Penn/Barstool are uniquely positioned to operate their [online-sports-betting] business at higher margins than other operators given our view of Penn’s structurally different cost profile as a casino operator with 40-plus properties, the Barstool brand’s unique customer-acquisition channels, as well as Penn’s unique ownership structure with Barstool."
As far as iGaming, Chaiken said "the combination of Penn’s 20 million mychoice loyalty members, dominant physical casino footprint, and Barstool/Penn cross promotion/development, set Penn up to be a leader."
"This is the first time I’ve seen an analyst firm mention profit," Barstool Sports Founder Dave Portnoy said on Twitter, according to Bloomberg.
"Pray for everybody else if being profitable matters. We’re the only ones that don’t need to spend billions on advertising."