Shares of PENN Entertainment (PENN) rose 4.6% in early buying and selling Monday after BofA Securities upgraded the inventory on the early success of ESPN Bet.

Analysts upgraded shares to Buy from Neutral and raised their value goal to $30 from $27. The new value goal gives over 22% upside from Friday’s closing value.

“We think ESPN Bet creates an asymmetric risk-reward, with 1) initial download and app activity much stronger than anticipated, 2) initial offers showing promotional discipline, and 3) stable Q3 earnings (see report) being better than expected for PENN’s core gaming business,” the analysts commented.

They highlighted that ESPN Bet has surged forward in preliminary downloads and rankings, solidifying its attain amongst prospects. Since final Tuesday, it is constantly held the highest #1 or #2 spot amongst free iOS apps, amassing 865,000 downloads and sustaining a powerful 4.8 ranking on the app retailer. Remarkably, this has been achieved even earlier than the NFL Sunday information has been factored in.

“While skepticism centered on ESPN’s support of the launch (vs. co- marketing deals with CZR/DKNG), we see encouraging signs with full-screen takeovers on the app/web and early content mentions,” the analysts added.

Still, from the analysts’ perspective, PENN nonetheless has to reveal and improve three key areas: 1) its potential to retain customers, 2) its technological infrastructure and breadth of market choices (together with stability throughout in-game experiences, various participant proposition bets, and options like darkish mode), and three) its foothold in varied states, particularly New York.

Nevertheless, it is a promising starting, they mentioned. The analysts challenge a 6-7% share within the on-line sports activities betting (OSB) area, aligned with PENN’s preliminary expenditure that might equate to roughly a ten% share. Each 1% enhance in market share interprets to an approximate $2 enhance in PENN’s inventory worth, they added.