this is Morgan Stanley letter on PENN
Price Target
$45
Equal to Base-Case scenario
Bull Case
$50
(Implies 8.5x
EV/ EBITDA)
New developments outperform; Brisk regional recovery
New developments generate incremental EBITDA of $300mm by 2013
Upfront cannibalization impact is moderate ($40mm EBITDA impact in 2013)
Organic same-store EBITDA CAGR of 8% through 2012
Base Case
$45
(Implies 8.2x
EV/ EBITDA)
New developments offset cannibalization; Moderate regional recovery
New developments generate total incremental EBITDA of $260mm by 2013
Cannibalization impact is significant ($60mm EBITDA impact in 2013)
Organic same-store EBITDA CAGR of ~6% through 2012
Bear Case
$34
(Implies 7.9x
EV/EBITDA)
Project delays; Significant cannibalization; Weak regional recovery
Returns from new developments are below expectations (EBITDA of
$195mm)
Cannibalization impact is significant (~$100mm EBITDA impact in 2013)
Organic same-store EBITDA increases 2-3% annually through 2012