Penn Entertainment drops as analyst doesn't expect strategic review in near term

Penn Entertainment (NASDAQ:PENN) sunk 8.2% at least partly after an analyst said that he doesn't expect the gaming company to conduct a strategic review in the near term.

The analyst comment comes after Penn (PENN) shares soared 20% on May 31 after activist Donerail Group said Penn could attract double its current trading price in a sale and urged the company to put itself on the market.

"Despite the activist letter, we don’t think any sort of formal strategic review at PENN is likely in the near-term," Truist analyst Barry Jonas wrote in a note on Friday after recently meeting with management.

Jonas said a strategic review may be unlikely due to a "clear ESPN Bet product roadmap," football season on the horizon and higher/volatile interest rates still impacting overall M&A.

"We also note PENN is one of the most efficient land-based operators in our coverage, which limits any low hanging operational synergies," Jonas, who has a buy rating on PENN and raised his price target to $25 from $23 on Friday.

The Penn (PENN) share reversal on Friday comes after the stock jumped 7% on Wednesday amid some speculation that Boyd Gaming (BYD) could be interested in all or parts of the PENN after Boyd added a director with M&A experience to its board.