UPDATE: Jefferies Starts Rush Street Interactive (RSI) at Buy, Internally Developed Tech Provides a Competitive Advantage

April 16, 2021 4:41 AM EDT
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Price: $12.01 -2.91%

Rating Summary:
    4 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 4 | New: 24
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(Updated - April 16, 2021 8:59 AM EDT)

Jefferies analyst David Katz initiates coverage on Rush Street Interactive (NYSE: RSI) with a Buy rating and a price target of $21.00. The company's internal technology development provides critical strategic and economic benefits that position the company for long-term value creation, as defined by a potential 14% market share of the $19B iGaming market and 7% share of the $19B sport betting market.

The analyst stated "Our approach to forecasting and valuation is similar to that with other operators. We are confident in the longer-term margins for RSI given historical profitability, although reinvestment into proliferating states is likely near term. We forecast revenue of $439MM in 2021, $577MM, in 2022, and $687MM in 2023, which supports a value of $19 on 6.0x 2023 revenue. We also include our multi-stage DCF to 2033, with stage 1, 2, and 3 growth rates of 55%, 35%, and 26%, respectively, WACC of 13%, and 3% terminal growth rate. Finally, we include our SOTP scenario analysis for both iGaming and Sports Betting assuming a blended range of 9-11% market share, 25% EBITDA margin, and ~13x multiple discounted from 2030. The results are $24 and $21. Ultimately, our blended target is $21."

For an analyst ratings summary and ratings history on Rush Street Interactive click here. For more ratings news on Rush Street Interactive click here.

Shares of Rush Street Interactive closed at $14.31 yesterday.


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