Portnoy Slams Deutsche Bank for ‘Wrong’ Call on Penn National

(Bloomberg) -- Barstool Sports founder Dave Portnoy took to Twitter to slam Deutsche Bank analyst Carlo Santarelli on his cautious view of Penn National Gaming Inc., a 36% equity-stake holder of Barstool.

Portnoy tweeted a question to CNBC host Jim Cramer: “Do analysts ever get fired for being catastrophically wrong?” Santarelli has the lone sell rating on Penn National and his 12-month share price estimate is about 57% below where it currently trades. Penn National's stock which closed at $72.70 on Wednesday, climbed as much as 3.1% today.

Santarelli earlier reiterated his bearish view on Penn National, writing that there are “a lot of unfounded expectations” baked into the “lofty” share price. Still, the analyst revised his estimates higher to account for the casino owner's third-quarter update issued Sept. 29, noting margin strength during the period.

Santarelli declined to comment on Portnoy's tweet.

The Deutsche Bank analyst maintains that Wall Street is affording Penn “far too much credit” around sports betting and iCasino, noting that “there has been little to no incremental legislation that advanced the iCasino or sports betting agendas in the U.S.,” and even less data that would justify the expectations of some peers for a doubling of the total addressable market (TAM) for sports.

Retail investors have essentially turned Penn National into an “internet meme of sorts,” which has attracted institutional investors from segments beyond the “traditional gaming arena,” Santarelli told clients. The craze has been further juiced by this “big picture” TAM story and Twitter and Instagram posts. Combined, this has created a “narrative that largely abandons fundamental rationale.”

His price target moved to $31 per share from $22, but remains the lowest projection according to views compiled by Bloomberg.

Meanwhile, Union Gaming analyst John DeCree drew praise from Portnoy after he predicted that Penn would be a triple-digit stock over the next 12 months as he raised his target to a Street-high $100 from $62 in a note dated Oct. 1. Portnoy referred to DeCree as “people with brains” in a separate tweet.

Shares of Penn have climbed more than 180% since announcing that it would acquire a stake in Barstool for $163 million in cash and convertible preferred stock on Jan. 29. Today's market capitalization sits at $11.5 billion versus $3.04 billion earlier this year, according to data compiled by Bloomberg.

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