Penn National Gaming (NASDAQ: PENN) is in a long decline, and a once booming casino operator has shed half its value since March. Now, the casino giant is locked in a four-month slump, and its shares fit the bill as oversold.
Schaeffer Investment Research (SIR) indicates that the condition can give Penn short-term rallies of the afflicted stocks. SIR says that Penn stock has a history of bouncing back when it is oversold.
Currently, PENN National Gaming stock sits around $70. The current price is only half of its all-time high that was disrupted by COVID-19. In a statement, Schaffer says that PENN has drifted below 28 and into the oversold territory, thus presenting s good buying opportunities.
Though PENN stock is 18.57 percent off a year to date, the name still has supporters on Wall Street. Some are saying that the sell-off is overdone. The consensus price target on the gaming equity is at $108, meaning that the shares would need a 50 percent gain to reach that forecast.
PENN, however, remains a source of division among analysts, with some defending its expansion margin. The selloff could benefit investors as Schaeffer indicates. Shares could rebound and trigger upgrades or price target revisions.
“Many analysts remain on the sidelines, and a shift toward upgrades and/or price-target hikes could provide tailwinds for PENN National Gaming stock. Of the 13 brokerages covering PENN, six maintain hold or strong sell rating.”
Schaeffer data further indicates that PENN is a short squeeze candidate, meaning if shares rise, some traders could be forced to cover positions, further hiking the stock in the process.
“There is also room for a potential short squeeze on PENN National Gaming stock. Short interest tapered off in the most recent reporting period, yet the 13.25 million shares sold accounts for nearly nine percent of PENN’s total available float.”