In hindsight, it's not much surprise that the Aristocrat Leisure Limited (ASX: ALL) share price is among the strongest performing ASX 50 shares in April.
Aristocrat shares are up 6.88% to $37.14 this month, and both Goldman Sachs and Citi think they are due to go higher.
The leading pokie and casino management business fell to less than half its current price through COVID-19 last year, but the business' forecasts are now showing that was exceptionally pessimistic.
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Aristocrat's projected future growth
Goldman has set Aristocrat a price target 27 cents above its current value, while Citi has set its target at $40.60. The company's annual general meeting in February revealed that 90% of its pokie machines are active across Australia and the US, while its digital arm continues to gain market share from its rivals.
In addition to its gaming operations, Aristocrat subsidiary Big Fish is the world's largest distributor of free-to-play online games, which positions Aristocrat to continue growing its digital gambling revenue.
It's possible Aristocrat share price gains are being driven by this digital potential, with the company aiming to spend up to 28% of its online revenue on new customer acquisition.
The company is already in the top-five mobile gaming operators in the world. Leading into April, Aristocrat was bullish about its own plans to continue growth in gaming operations.
So was broker Morgan Stanley, which said the company's balance sheet makes it the best bet in the gaming industry.
This leaves ALL best placed to continue to outperform peers and gain market share in participation gaming, and strengthen its competitive position and the durability (and hence value) of its earnings, in our view.
We think ALL's Digital business deserves a 18x FY22 EV/EBIT multiple, at the top end of mobile gaming peers. Post COVID-19 we expect ALL to emerge in a net cash position in FY23 with ~A$1.9bn of debt capacity to deploy by FY22.
Aristocrat share price snapshot
Considering the Aristocrat share price has risen 20% in 2021 and by 45% in the past 12 months, it's still had its volatile moments.
This is the third time Aristocrat shares have been above $34 since November, but it's the first time they've managed to stay there for more than two weeks.
