Intensifying Competition Continues to Weigh on Penn National Gaming in Q4; Dropping Coverage

Penn National Gaming PENN reported fourth-quarter results that met consensus on the top line, but were below consensus for EBITDA. Revenue increased 7.3% to $676.5 million (in line with consensus of $676.5 million) and adjusted EBITDA increased 17.8% to $156.5 million (below consensus of $162.8 million). Management provided guidance for 2012 revenue of $2.79 million (below consensus of $2.953 million) and 2012 EBITDA of $729.6 million (below consensus of $735 million). There is no change to our $37 fair value estimate based on the fourth-quarter results, and view the shares as moderately overvalued and unattractive due to concerns pertaining to intensifying competition in the regional gaming industry.