Rush Street Interactive stock price target raised to $18 at Jefferies

Jefferies raised its price target on Rush Street Interactive (RSI) to $18, maintaining a Buy rating, citing revised FY2025 and FY2026 revenue and EBITDA projections that exceed consensus, alongside an increased EV/Sales multiple. This upgrade follows RSI's strong Q1 2025 earnings beat, which saw revenue grow 21% year-over-year, and continued robust iGaming expansion, including a 36% revenue increase in April. Despite RSI's strong performance and financial health, evidenced by a 70% stock return over the past year, JPMorgan initiated coverage with a neutral rating, expressing concerns over current valuation and growth pace relative to peers.

Analysis

Rush Street Interactive (RSI) is exhibiting strong operational momentum, underscored by a price target increase from Jefferies to $18.00, which maintains a Buy rating. This revision is predicated on an increased EV/Sales multiple of 3.5x and revenue and EBITDA forecasts for FY2025 and FY2026 that surpass consensus estimates; Jefferies projects $1.07 billion in FY25 revenue versus a $1.05 billion consensus. The positive outlook is supported by RSI's recent performance, including a Q1 2025 earnings beat with EPS of $0.09 and revenue of $262.4 million, marking a 21% year-over-year increase. Growth was primarily fueled by a 25% rise in online casino operations, a segment that continued to show strength with 36% revenue growth in April. The company's financial position appears solid, with more cash than debt on its balance sheet. However, the sentiment is not uniformly bullish. JPMorgan has initiated coverage with a Neutral rating and a $14.00 price target, acknowledging RSI's product capabilities but citing concerns over its current valuation and a comparatively slower revenue growth trajectory versus peers, especially after the stock's 70.87% gain over the past year.

Key Decisions for Investors

• Given the strong operational momentum, recent earnings beat, and Jefferies' upgraded price target to $18, investors with a bullish outlook could view the current price as an entry point, supported by above-consensus growth forecasts.
• Investors should heed JPMorgan's neutral stance, which highlights potential valuation risks after a 70% year-over-year stock appreciation, and carefully assess if future growth can sustain the current multiples relative to peers.
• The performance of the iGaming segment, which saw 36% revenue growth in April, remains a critical metric to monitor as it is the primary driver behind the company's outperformance and revised analyst estimates.