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On Friday, Susquehanna analyst Joseph Stauff upgraded shares of Rush Street Interactive (NYSE:RSI) from Neutral to Positive, setting a price target of $14.00. The upgrade came after the stock experienced a 15% decline on Thursday, which Stauff believes was an overreaction to the company’s conservative guidance for 2025. According to InvestingPro data, RSI has seen a 17.56% decline over the past week, though it maintains a remarkable 102% gain over the last year. The company’s current market capitalization stands at $2.59 billion.
Stauff’s optimism is based on several factors, including his view that the company’s estimates appear reasonable despite a significant growth slowdown in Colombia. He noted that this slowdown is more than compensated for by a monopoly in Delaware that is expected to grow by 60%, and a core North American iCasino growth of 20%, with online sports betting remaining flat and additional small contributions from Mexico and Peru. InvestingPro data supports this growth narrative, showing impressive revenue growth of 33.7% in the last twelve months, with analysts forecasting continued strong growth this year.
The analyst also sees potential for significant upside if there is iCasino legalization in more states, with Maryland appearing to be the most likely candidate, while New York and Illinois are also possibilities. Stauff highlighted Rush Street Interactive’s strategic value, citing its high-quality iCasino product in North America, which is characterized by its player mechanics, the focus of its CEO, and its successful history of operations outside the United States, particularly in Latin America.
Stauff’s price target of $14.00 is based solely on the fundamental upside relative to his estimates and does not include potential gains from expanded iCasino legalization or the strategic value if there is consolidation in the North American iCasino market. He mentioned that MGM Resorts (NYSE:MGM) International is likely to acquire Entain’s stake in BetMGM, which could have implications for the industry. InvestingPro analysis suggests RSI is currently undervalued, with analyst targets ranging from $12 to $17. For deeper insights into RSI’s valuation and growth potential, including 14 additional ProTips and comprehensive financial analysis, check out the Pro Research Report available on InvestingPro.
In other recent news, Rush Street Interactive reported a strong fourth-quarter 2024 performance, exceeding Wall Street expectations with an earnings per share (EPS) of $0.07 against a forecast of $0.05. The company also reported a revenue of $254.2 million, surpassing the anticipated $243.83 million, marking a 31% increase year-over-year. For the full year, Rush Street Interactive’s revenue reached $924.1 million, up 34% from the previous year, with adjusted EBITDA showing an 11-fold increase to $92.5 million. The company ended the year with $229 million in unrestricted cash and no debt.
In addition to the impressive earnings report, Benchmark analysts raised their price target for Rush Street Interactive to $14 from $12, maintaining a Buy rating. This adjustment follows the company’s record-breaking quarter and highlights the firm’s optimism about Rush Street’s future prospects. Analysts from Benchmark pointed to the company’s effective marketing strategies and expansion of its iCasino operations as key drivers for future growth.
Rush Street Interactive has also provided a revenue guidance range of $1,010 million to $1,080 million for 2025, with a midpoint growth expectation of 13%. The company forecasts an adjusted EBITDA of $115 million to $135 million, representing a midpoint growth of 35%. Despite potential regulatory challenges, particularly in Colombia, the company’s operational agility and strategic initiatives are expected to provide resilience. CEO Richard Schwartz emphasized the company’s focus on high-quality user experiences, which has contributed to its successful performance and strategic positioning.
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