If you have a penchant for growth shares, like I do, then now could be the time to consider an investment in the ASX 200 tech stock in this article.
That's because it has just been named as a buy by analysts at Bell Potter, who believe that big returns could be on the cards over the next 12 months.
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Which ASX 200 tech stock?
The tech stock being tipped as a buy is Aristocrat Leisure Ltd (ASX: ALL).
The gaming technology company's shares have been sold off this week following the release of a softer than expected first half result. However, Bell Potter believes this has been an overreaction and is urging investors to buy the dip.
In response to its results, the broker said:
ALL reported +5% YoY constant currency (CC) continuing revenue growth to A$3,035m below BPe of A$3,179m and consensus of A$3,180m, supported by +2% CC YoY growth in Product Madness (+2% above BPe) and +135% YoY CC growth in Interactive (-10% below BPe), offset by -1% YoY decline in Gaming (BPe +9%),. EBIT(A) was A$1,052m, up +8% in CC and continuing terms.
Normalised NPATA of $733m was up +2% YoY (-9% miss on BPe and VA), with tax rate 2% higher than expected on regional mix. The gaming ops install base grew by 2.5k units to 73.6k, 0.1k units below consensus. The top line miss was primarily driven by YoY declines in outright sales into ANZ and international markets as well as lower FPD [fee per day].
There were a number of reasons behind the weaker FPD. And while it feels they could be one-offs, it has trimmed its forecasts given recent trends. Bell Potter adds:
FPD declined due to channel and product mix, inclement weather, and to a lesser extent, promotional activity. Although these factors could be described as one-offs, we note ALL's market-leading FPD has gone down to sideways over the last 3 years. Given this trend we have tempered our FPD growth expectations.
Buy the dip
Bell Potter has responded to the results by retaining its buy rating but cutting its price target slightly to $79.00 (from $83.00).
So, with the ASX 200 tech stock currently trading at $62.58, this implies potential upside of 26% for investors over the next 12 months.
The broker believes that a better second half is coming, making now the time to buy. It concludes:
We retain our Buy recommendation. Although we expect consensus downgrades to roll through following this result, we believe most of the factors driving the miss are isolated to 1H25 and believe ALL is well placed to deliver a strong 2H25. We continue to expect ALL's leading R&D investment will drive share gains in each of the markets it operates in. The success of Phoenix Link, which is growing at record levels is one such example of ALL's R&D flywheel expected to bear fruits in the near term.
