Stifel Highlights Top Gaming Stock Ideas For 2026

The stocks for Caesars, Penn Entertainment and FanDuel parent Flutter are all “top ideas” in Stifel‘s Gaming & Leisure 2026 Outlook.

The three stocks join Norwegian Cruise Line in a combination of stocks to own that “will allow investors to capture the LV/regionals/cruise/digital upside opportunity,” Tuesday‘s note said.

Digital gaming-related stocks “massively underperformed” in 2025 and Stifel sees an “attractive risk/reward” in companies that will directly benefit from recent tax changes and a potential stimulus.

Changes To Gaming Stocks

Stifel increased the price targets on both Caesars (39 dollars, plus 2 dollars) and Penn (37 dollars, plus 1 dollar) while dropping Flutter’s (304 dollars, minus 26 dollars) target. All three are buy rated and have 64.1%, 48.5% and 38.3% upside to their new targets, respectively.

The stocks were part of last year’s underperforming group Stifel mentioned. As of Tuesday’s close:

  • Caesars is down 40.2% from its 2025 closing high and fell 28.2% in 2025.
  • Flutter is down 28.8% from its 2025 closing high and fell 15.6% in 2025.
  • Penn is down 34.8% from its 2025 closing high and fell 23.3% in 2025.

Valuations Attractive On Gaming Stocks

The Stifel team expects for volatility to continue for both online casino and sports betting but is positive on the fundamentals and valuations of all three gaming companies.

Prediction market concerns are “bottoming” while gaming expansion is trending positively given state budget deficits, a positive for all three.

Caesars and Penn, meanwhile, should benefit from both the discretionary spending growth that should raise gaming revenues as well as the IRS slot reporting limit rising to 2,000 dollars.

Can Caesars Hit Digital Targets?

Stifel selected Caesars as its top gaming pick for both Macau and Las Vegas while noting the undervalued digital segment.

“Even with continued handle/hold growth well in the double-digit percentage range on the iGaming side and idiosyncratic tailwinds in OSB, investors remain unwilling to give CZR credit for the company’s target of 500 million dollars in run-rate digital EBITDA in FY26,” Stifel wrote.

The stock should benefit if Caesars gets “anywhere close to that number,” even on a hold-adjusted basis, Stifel said. If there is a clear path to that 500 million dollars, management could “more seriously” consider options for potentially spinning off the digital business.

Penn Top Regional Pick

Penn, meanwhile, is Stifel’s top regional gaming operator pick. In Stifel’s view, management is “finally taking the appropriate and painful steps to rightsize digital strategy” while listing some of the “capital destruction” from online sports betting and online casino moves:

  • 2 billion dollars acquisition of theScore.
  • 550 million dollars spent on Barstool Sports with an 850 million dollars write down on the sale.
  • 1.2 billion dollars in cumulative adjusted EBITDA losses from the first quarter of 2021 through the third quarter of 2025.

Those steps included ending the deal with Disney for ESPN Bet early as both sides could opt out of the deal in year three.

Stifel said the move seemed well-received but has not been reflected in the stock. That is probably due to concerns over profit targets given low iGaming share, potential churn in the switch from ESPN Bet to theScore Bet, fixed costs of the owned tech and a “management credibility overhang,” Stifel said.

Penn made changes to the corporate structure earlier this week that will see the digital business get its own COO.

Flutter Down On UK Issues

Stifel selected Flutter as its top digital gaming idea for 2026 and had little negative to say about the US operations. Flutter’s target fell due to estimate adjustments following higher taxes in the United Kingdom.

After the stock suffered from sports outcomes last year, there is reason to believe Flutter will get to refocus on “attractive underlying fundamentals.” Stifel did note that this year could still include some headwinds, such as the risk of more tax increases, regulation tightening from betting scandals, amplified attention on hold volatility and an answer on the legality of prediction markets potentially being three years out.

The competitive promo environment faced by FanDuel in online sports betting should improve through this year, Stifel said, noting “unsustainable” NFL offers from DraftKings and profitability targets for Fanatics.