Could there be another 19% upside to the Aristocrat Leisure share price?

This could be the case, should one broker’s thesis play out.

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Key points

  • Aristocrat Leisure looks set to deliver further upside according to one broker 
  • Backed by a number of factors, Aristocrat's business model is also resilient during economic cycles, it says 
  • In the past 12 months, the Aristocrat share price has collapsed more than 14% into the red 

The Aristocrat Leisure Limited (ASX: ALL) share price is rangebound today and is currently trading around 1% higher at $36.20.

This brings gains to almost 7% over the past month for Aristocrat.

In broad market moves, the S&P/ASX 200 Index (ASX: XJO) is rangebound today and is flat at 6,609.

More upside in the Aristocrat share price?

Analysts at Morgans are constructive on the share and reckon Aristocrat makes a good investment case.

It values the company at $43 per share and notes a strong history of sales growth over the past 5-years to date.

This suggests another 19% return potential at the current Aristocrat share price.

“[Aristrocrat] has delivered revenue growth of 17% pa over the past five years and 80% of revenue in FY21 was recurring,” Morgans said.

“We expect Aristocrat to continue to take market share in all its product segments,” it added.

Another factor Morgans notes is that gaming machines are typically more resilient during economic downturn.

For the $24 billion company by market value this could spell further revenue growth, the broker said, backed by its $3.3 billion in available liquidity.

“Aristocrat has a stated ambition to build a meaningful presence in the rapidly growing online real money gaming segment, which we believe may be achieved both through organic investment and inorganic acquisitions,” it mentioned.

In the past 12 months, the Aristocrat share price has collapsed more than 14% into the red and trades down 17% this year to date.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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