Aristocrat Leisure Ltd (ASX: ALL) shares were under pressure on Wednesday and crashed deep into the red.
The ASX 200 share was down as much as 15% at one stage before closing the session 9% lower at $62.10.
The catalyst for this was the release of a half year result that fell short of the market's expectations.
While this is disappointing, Goldman Sachs thinks it has created a buying opportunity for investors.
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What is the broker saying about this ASX 200 share?
Goldman notes that Aristocrat's half year results missed on every key metric. It said:
ALL reported 1H25 Revenue/EBITA/NPATA/EPSA that was +9%/+11%/+6%/+8% vs. pcp to A$3,035mn/A$1,052mn/A$733mn/116cps, which was -4%/-4%/-8%/-9% vs. GSe and -5%/-6%/-9%/-9% vs. VAe.
But that's not to say that the release was a complete disappointment. The broker has named a few key positives. It adds:
Key positives: (1) NA Gaming Ops net adds of +2,472 was significantly ahead of peers, with momentum carrying through to 2H25 (GSe +2,528); order visibility remains healthy as macro volatility eases vs. prior months; (2) NA Gaming margins +1.3 ppts to 58.1% – a level we believe is at least sustainable given operating leverage, mix and ongoing cost optimisation, noting ALL does not expect any tariff-related cost impacts in FY25 given diversified supply chains; (3) PM bookings +4% vs. market -6% with margins +3.1 ppts to 42.9% where we see material upside as more volumes transact via its DTC platform (c.13% of revenue today).
Big returns
In light of the above, the broker remains positive on this ASX 200 share and believes that its share price weakness has created an attractive buying opportunity for investors.
This morning, its analysts have retained their buy rating on Aristocrat's shares with a trimmed price target of $74.00. Based on its current share price, this implies potential upside of over 19% for investors over the next 12 months.
Commenting on its bullish view of the stock, the broker said:
ALL is the market leader in land-based content and cabinets, supported by its above industry R&D spend that should enable it to grow share beyond >40%. ALL will also be returning to its core competency of slots content following the sale of Plarium, with land-based synergies to support share gains. Lastly, we believe ALL should benefit from its high exposure to the US economy, including currency tailwinds into FY25.
