Rush Street Interactive (RSI) is back in focus as it prepares to report earnings after the bell this Wednesday, with the market watching an expected 36.6% year-on-year revenue increase for the quarter.

Rush Street Interactive’s recent pullback, including a 1-day share price decline of 2.94% and 7-day share price decline of 8.8% to US$30.69, sits against a much stronger backdrop, with a 90-day share price return of 9.69%, year to date share price return of 58.93% and a very large 3-year total shareholder return of about 7x that hints at how expectations and perceived risk around the stock have shifted over time.

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Rush Street Interactive’s share price has cooled off even as estimates and price targets sit a little higher than the current US$30.69. So where does fair value really sit within that spread, and how wide is the gap?

Most Popular Narrative: 5.4% Undervalued

Rush Street Interactive’s most followed narrative places fair value at about $32.45, slightly above the last close at $30.69. This is where the DCF and growth assumptions start to matter.

The analysts have a consensus price target of $32.45 for Rush Street Interactive based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $38.0, and the most bearish reporting a price target of just $30.0.

Want to see what is sitting underneath that fair value for Rush Street Interactive? The narrative leans on faster earnings growth, fatter margins, and a richer future earnings multiple. You may be curious how those pieces fit together and what kind of revenue scale is being pencilled in by 2029.

Result: Fair Value of $32.45 (UNDERVALUED)

However, the Rush Street Interactive story still carries real pressure points. These include heavier exposure to Latin American tax and regulatory shifts and rising marketing spend that could squeeze margins.

Another View On Rush Street Interactive’s Valuation

The analyst narrative points to Rush Street Interactive trading about 5.4% below a fair value of $32.45. The market is less forgiving on current earnings though. The stock trades on a P/E of 86.2x compared with a fair ratio of 39.7x, a peer average of 69x, and a US Hospitality average of 24.7x. That gap suggests investors are paying a premium today. The question is whether you think the story justifies that kind of stretch.

Next Steps

If this Rush Street Interactive story feels finely balanced, take a moment to review the data yourself and see how it lines up with your expectations. To understand why some investors are optimistic about the company, check out the 3 key rewards.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.