Aristocrat Leisure Earnings: Strong Gaming Machine Performance

Aristocrat Leisure is performing better than expected. Underlying fiscal 2024 first-half net profit lifted 16% on the prior corresponding period to AUD 764 million. The core electronic gaming machines business continues to capture share, increased monetization in digital gaming is more than offsetting falling player numbers, and profitability in the nascent iGaming business is improving. We lift our fiscal 2024 underlying net profit forecast by 13% to AUD 1.5 billion, a 17% improvement on the PCP as earnings from the NeoGames acquisition come online during the second half. We lift our fair value estimate by 7% to AUD 48 per share due to the increase in near-term earnings, a larger installed base leading to higher longer-term earnings, and the time value of money.