Macquarie tips 30% return for Aristocrat Leisure shares

The broker sees big potential returns from this tech stock.

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Key points
  • Aristocrat Leisure shares are down over 2% amid a market selloff, now priced at $58.27, but Macquarie sees this as a buying opportunity, maintaining optimism about the company's growth prospects.
  • Despite a slight reduction in earnings forecasts, Macquarie expects Aristocrat to achieve solid growth, forecasting a 12% CAGR in EPSA from FY25 to FY28, driven by its Gaming business's continued market share gains and successful product lines.
  • Macquarie retains an outperform rating with a price target of $75.00, suggesting a potential return of over 30% when including the expected 1.7% dividend yield, viewing the recent price drop as an overreaction to FY25 results.

Aristocrat Leisure Ltd (ASX: ALL) shares have been caught up in the market selloff on Friday.

At the time of writing, the gaming technology company's shares are down over 2% to $58.27.

While this is disappointing for shareholders, it could be a buying opportunity for the rest of us according to analysts at Macquarie Group Ltd (ASX: MQG).

Man with rocket wings which have flames coming out of them.

Image source: Getty Images

What is the broker saying?

Although investors have been selling Aristocrat Leisure's shares since the release of its full year results, the broker saw enough in those results to remain bullish on the stock.

And while it has trimmed its earnings estimates slightly, it still expects solid growth in FY 2026. It said:

Following the FY25 result we now forecast A$1,680m FY26 NPATA, +8% yoy growth (+11% constant-FX), but 2% below prior forecast (A$1,706m). Overall we continue to see Aristocrat delivering +10-15% medium-term EPSA growth (MQe = +12% CAGR, FY25-28) with benefits from ongoing buybacks.

It highlights that this growth will be supported by the key Gaming business, which continues to win market share. It adds:

Aristocrat's Gaming business continues to have momentum; we forecast +6% FY26 EBIT growth (+6% CAGR, FY25-28), with Gaming Ops continuing to win market share and to track around +4-5k annual net installs including Monopoly benefits (MQe = +4.6k in FY26), and with fee per day growth of +2% annually. During FY26, outright sales should continue to benefit from the Baron cabinet and supportive content in all regions, and this could persist beyond 1H26 (upside to MQe), but depends on performance / competitors. We also see margins tracking 58-60%, subject to revenue mix (outrights lower margin vs Gaming Ops).

Time to buy Aristocrat Leisure shares

Macquarie thinks that the company's shares are cheap at current levels and is urging investors to buy them while they can.

According to the note, the broker has retained its outperform rating and $75.00 price target on its shares.

Based on its current share price, this implies potential upside of 29% for investors over the next 12 months.

And with a 1.7% dividend yield expected in FY 2026, this lifts the total potential return to over 30%.

Commenting on its recommendation, the broker said:

Aristocrat has de-rated, trading on 21x 12mth fwd P/E; consistent with the ASX300 industrials, and which has only happened 6 times since 2010. We think there has been an overreaction to the FY25 result; growth is intact (+12% EPSA CAGR, FY25-28) and the balance sheet supports capital management/M&A.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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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