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Aristocrat Leisure Limited (ASX:ALL) shares tipped to hit $41.00

The Australian share market may have dropped lower on Wednesday, but that couldn’t stop the Aristocrat Leisure Limited (ASX: ALL) share price from pushing higher once again.

The gaming technology company’s shares finished the day 1.5% higher at $30.98, stretching their 12-month return to an impressive 41%.

Why did Aristocrat Leisure’s shares climb higher?

With no news out of the company, today’s gain is likely to be attributable to a broker note out of Deutsche Bank this morning.

According to the note, the broker has retained its buy rating and lifted the price target on Aristocrat Leisure’s shares to $41.10. This price target implies potential upside of almost 33% over the next 12 months.

Deutsche has become additionally bullish on Aristocrat Leisure after the Australian dollar weakened. As the company generates a significant portion of its revenue internationally, and in the United States in particular, it stands to benefit greatly from favourable currency movements.

Furthermore, the recent appointment of Jeff Karp to the role of managing director of its Big Fish Games business is seen as a big positive. Mr Karp has a strong track record of overseeing the development of popular games such as The Sims, EA Sports franchises, Words With Friends, and Draw Something.

Should you invest?

While there are a lot of growth shares in the tech sector such as Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) for investors to choose from, I would argue that the risk/reward on offer with Aristocrat Leisure puts it at the top of the list.

Thanks to the success of its core business, its fast-growing digital business, and its strong international earnings, I think Aristocrat Leisure is capable of growing its earnings at a strong rate over the coming years. I feel this makes its shares great value at 24x estimated FY 2019 earnings.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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