Although it has faded in late morning trade, in early trade the Aristocrat Leisure Limited (ASX: ALL) share price was one of the better performers on the market with a 2.5% gain to $23.75.
This increased its 12-month return to a sizeable 24%.
Why did its shares rise this morning?
The catalyst for today's share price gain appears to be a research note out of Goldman Sachs this morning.
According to the note, Goldman has reinstated coverage on the gaming technology company with a conviction buy rating and $30.70 price target. This price target implies potential upside of over 29% for its shares from today's high.
Goldman has made the move after its survey found it to be the preferred slot (pokie) manufacturing provider among major players. Aristocrat Leisure dominated the vote with 60% of those surveyed in Goldman's Slot Manager's Survey picking it.
Furthermore, the company's Lightning Link game is the most anticipated game in the history of the broker's survey, scoring a sizeable 30% of the vote. This breaks the record set by Ainsworth Game Technology Limited (ASX: AGI) with its Wheel of Fortune game in 2005.
As a result, the broker believes that Aristocrat Leisure is poised to take market leadership in the United States, underpinning a robust earnings growth outlook.
This has led to its analysts upgrading their earnings estimates for the company through to FY 2020.
Goldman now estimates that Aristocrat Leisure will deliver earnings per share of $1.11 in FY 2018, $1.35 in FY 2019, and $1.58 in FY 2020. These are approximately 5% to 11% over the Bloomberg consensus median estimates according to the note.
Should you invest?
I completely agree with Goldman Sachs on this one and think that Aristocrat Leisure is one of the best growth shares on the market right now.
Based on its current share price and Goldman's estimates, Aristocrat Leisure's shares are trading at just over 17x FY 2019 earnings. I think this is dirt cheap given its growth profile, especially in comparison to growth shares such as Bellamy's Australia Ltd (ASX: BAL) and Treasury Wine Estates Ltd (ASX: TWE).
