On Thursday, Oppenheimer showed confidence in Rush Street Interactive (NYSE:RSI) by increasing the company's price target to $9.00 from the previous $7.00, while keeping an Outperform rating on the stock. The decision followed Rush Street Interactive's announcement of its initial 2024 revenue and EBITDA guidance, which exceeded Wall Street's expectations by 5% and $2 million, respectively.
The upward revision was attributed to robust double-digit growth in iGaming, better customer acquisition cost efficiencies, and expanding operations in Latin America.
The firm highlighted Delaware's impressive performance, where Rush Street Interactive has generated an annualized gross gaming revenue (GGR) of $60 million in just the first two months of operation. This success was seen as a testament to the company's high-quality user experience. Additionally, the firm expressed optimism about Rush Street Interactive's ability to maintain a stable market share despite a competitive promotional environment, suggesting a strong loyalty base among its core users.
The analyst noted the successful scaling of operations in Colombia and Mexico, which are considered indicative of the company's potential in the broader Latin American market. The updated financial model by Oppenheimer projects that Rush Street Interactive's EBITDA will double by 2025.
Despite this, the company's stock is currently trading at 14 times Oppenheimer's estimated EBITDA for 2025, which implies that the market may not fully recognize the company's consistent top-five iGaming market share and the prospects for iGaming legislation.
In summary, Oppenheimer's maintained Outperform rating reflects a positive outlook on Rush Street Interactive's future financial performance and market position. The firm's analysis suggests that Rush Street Interactive is well-positioned for continued growth and expansion, particularly in the iGaming sector and in emerging markets such as Latin America.
InvestingPro Insights
In light of the recent analysis by Oppenheimer on Rush Street Interactive (NYSE:RSI), certain metrics from InvestingPro paint a detailed financial picture of the company. With a market capitalization of $484.12 million, the company's financial health and stock performance can be further understood through these real-time data points. The Price to Book (P/B) ratio stands at 23.26 as of the last twelve months ending Q3 2023, which is relatively high and may reflect investor confidence in the company's assets despite its lack of profitability during the same period. Additionally, the company's revenue growth remains strong, posting an 18.95% increase over the last twelve months as of Q3 2023.
InvestingPro Tips suggest that Rush Street Interactive holds more cash than debt on its balance sheet, providing a degree of financial stability. However, analysts do not anticipate the company will be profitable this year. The stock has also experienced significant volatility, with a 7.86% decrease in price total return over the past week, but it has shown a strong return over the last three months, with a 39.64% increase. These movements indicate a potentially opportunistic landscape for investors who are comfortable with higher risk.
For those interested in a deeper dive into Rush Street Interactive's financial metrics and stock performance, InvestingPro offers additional tips that can guide investment decisions. Readers can explore further by visiting https://www.investing.com/pro/RSI and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 additional InvestingPro Tips available, investors can gain a more comprehensive understanding of the company's financial position and market potential.
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