Aristocrat Leisure Ltd (ASX: ALL) shares were in fine form on Wednesday.
The gaming technology company's shares ended the day 13% higher at $51.94 after investors responded positively to its half-year results.
Is it too late to invest? Let's see what Bell Potter is saying about the ASX 200 stock.
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A strong result
Bell Potter was pleased with its performance. Although Aristocrat's revenue was a touch softer than expected, its profits were ahead of estimates thanks to lower than anticipated corporate costs. It said:
ALL reported flat revenue growth (+6% constant currency (CC)) to $3,028m below BPe of $3,040m and consensus of $3,056m, driven by +5% YoY growth (+12% CC) in Gaming (BPe +4% growth), a -11% YoY decline (-4% CC) in Product Madness (BPe -10%) and a -1% YoY decline (-9% CC) in Interactive (BPe – 14%). EBIT(A) was A$1,117m, up +6% YoY (+14% CC). Normalised NPATA of $794m was up +8% YoY (+1% beat vs. BPe). The gaming ops install base grew by 2.0k units to 77.2k, slightly ahead of BPe and consensus with the Premium growing by a pleasing +2.3k.
The beat to consensus was driven by a $33m better than expected Corporate costs print which masked a weaker than expected result in Product Madness with the broader social slots market declining 11% YoY. Fee per day (FPD) of $53.1/d was down HoH and 1% below BPe, however, the outlook for this metric appears optimistic with earnings call commentary suggesting upward pressure due to higher performing games entering the install base.
The broker was also pleased with the company's outlook commentary. It adds:
ALL reiterated most outlook comments including NPATA grow over FY26e on a constant currency basis. ALL expects to deliver Gaming ops net adds towards the upper end of its 4-5k target and did not rule out growth higher than this range.
Aristocrat shares tipped to rise further
According to the note, Bell Potter has retained its buy rating and $61.00 price target on Aristocrat shares.
Based on its current share price of $51.94, this implies potential upside of more than 17% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We retain Buy. We expect ALL's leading R&D investment will drive market share gains. Top 2 game performance observed in both the core sales and premium gaming ops markets leaves us confident that ALL can grow the install base >4.0k per year and grow global shipments. Further, with leverage expected to reach 0.4x despite significant buybacks, ALL has substantial capacity to boost growth inorganically.
