A forecast by JP Morgan Securities LLC predicts that Australian slot manufacturer Aristocrat Leisure Limited will enjoy robust earnings in the coming year, and will grow its share of the North American slot markets.
In a note by Australia-based analysts Donald Carducci and Abhinay Jeggannagari issued after the manufacturer’s exhibit at the recent MGS Entertainment show in Macau, JP Morgan predicted that EBITDA in the Americas will rise by 17.5 percent this year to AUD865.3 million (US$627.1 million) and that annual earnings before interest and tax in Australasia and the rest of world will rise by 6.1 percent to AUD202.2 million.
“Aristocrat Leisure Ltd. has strong recurring revenues and is consistently gaining market share in North American gaming operations,” the note says. “Significantly increased digital exposure and title development for both land-based and digital platforms provide further growth.
“Capital management opportunities are available, and coupled with strong execution by management and the scarcity of earnings growth in the market, we believe the risk/reward remains attractive at the moment.”
The note said Aristocrat is widening both its ship share and profit margin in North America. “North America shows the unique leverage Aristocrat Leisure Ltd. is enjoying from incremental sales into the participation market. Incremental installed machines are roughly 80 percent margin,” the note says.
JP Morgan is maintaining an “overweight” rating for Aristocrat Leisure stock, with a price target of AUD35.
