Truist cut PENN Entertainment (NASDAQ:PENN) to Hold from Buy, lowering the price target on the stock to $30 per share from $33 in a note to clients Thursday.
Analysts told investors that "it's a long way to the top," and they are lowering the rating until they see more ESPN Bet proof points.
This week it was announced that ESPN agreed to a $2 billion deal to allow its brand to be used in PENN's online sportsbook.
"PENN reported an in-line Q2, though the ESPN announcement was the focus. With the stock outperforming today, we're opportunistically downgrading to Hold as we think the market will take time to digest this new deal," wrote analysts.
They noted that while PENN's upside from ESPN Bet could be material, they see "sizable execution risks that may not resolve soon." They added that land-based trends just look stable.
"With even mgmt admitting they're a show-me story, we advise waiting before adding to positions. We see next catalysts as mid-football season launch, followed by Q4n analyst day," said analysts.