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The Aristocrat (ASX:ALL) share price is back near all-time highs

rising leisure asx share price represented by three happy faces on slot machine
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The Aristocrat Leisure Limited (ASX: ALL) share price is trading near all-time highs. After getting smashed last year, shares in the poker machine business have made a miraculous recovery.

The Aristocrat share price hit a low of $14.81 last March amid the COVID-19 market rout. Since then, the company’s share price has more than doubled and is currently trading near its all-time high of $38.23.

Let’s look at what’s been happening with the Aristocrat share price.

Recovery pushes Aristocrat share price

At the company’s annual general meeting in February, Aristocrat painted an optimistic outlook for the company. Aristocrat highlighted that gaming looks to resurface from the COVID-19 pandemic in excellent shape. As a result, the company’s management predicted that the next decade for Aristocrat would be better than the prior decade.

Aristocrat added that the company’s land-based (non-digital) business has been recovering above original expectations.

More than 90% of machines were active in Australia, while 92% of venues were open in North America. In addition, Aristocrat noted that the company was placed within the top 5 mobile gaming operators in the western world.

What is the outlook for Aristocrat?

For FY21, Aristocrat plans to continue growth in gaming operations. The company’s growth is measured by the number of machines in operation and game performance. Aristocrat has grown its “floor share” in gaming venues and is tipping further digital bookings growth.

Aristocrat assured investors that the company’s foray into digital gaming would be permanent rather than temporary. To further its digital business growth, Aristocrat pledged it would spend 25% to 28% of digital revenue on user acquisition.

The company also noted that despite the impact of COVID-19, Aristocrat strengthened its liquidity and balance sheet. Aristocrat highlighted $2 billion in liquidity as of 30 September 2020. As a result, the company continues to monitor mergers and acquisitions as an option to accelerate growth.

Broker note

Recently, analysts at broker Goldman Sachs released a bullish outlook on the Aristocrat share price. Analysts noted that Aristocrat’s recovery across various regions was tracking ahead of its own internal expectations.

The broker noted that Aristocrat continued to increase its land-based business. In addition, the company’s digital business continued to improve. As a result, the broker reaffirmed its buy rating on Aristocrat with a share price target of $34.80.

At the time of writing, the Aristocrat share price has exceeded that rating, trading up nearly 2% at $35.56.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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