On Friday, JMP Securities adjusted its stance on Rush Street Interactive (NYSE:RSI) shares, downgrading the stock from Market Outperform to Market Perform after a recent earnings report. The firm recalibrated its valuation of the company, basing the business's worth on updated multiples of future earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow (FCF) projections.
The analyst from JMP Securities stated that the new valuation is set at 11.5 times the firm's 2026 EBITDA estimate, increased from the previous 7.8 times, and 17 times the FCF, down from 18 times. This reevaluation leads to a price target of $6 per share. Currently, Rush Street Interactive's stock is trading at a multiple of 15.1 times the 2025 consensus EBITDA, which positions it as the second-highest in the gaming sector, trailing only behind DraftKings (NASDAQ:DKNG).
Rush Street Interactive's valuation stands at a premium when compared to its peers, including Flutter, which trades at 14 times consensus EBITDA. The analyst highlighted that Rush Street Interactive has lower margins, FCF conversion, and less scale and liquidity than other companies in the industry. Given these factors, JMP Securities believes there are more compelling investment opportunities within the gaming sector.
The U.S. gaming market is currently trading at an average of 9 times EBITDA, while the international gaming market is trading at 6 times EBITDA. These benchmarks further underscore the premium at which Rush Street Interactive is trading, according to the firm's analysis.
Investors in the gaming space may consider these multiples and the analyst's perspective as they assess the relative value and performance potential of Rush Street Interactive in comparison to its industry counterparts.
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