ALL – Morgan Stanley rates the stock as Upgrade to Overweight from Equal-weight

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Morgan Stanley asserts Aristocrat Leisure does not need to outperform to succeed in digital. The company’s land-based success and scale provide a competitive advantage, despite growth moderating in this area.

Morgan Stanley adjusts estimates to allow for top-line growth from stronger digital growth, eases back margins to account for digital’s lower margins and adjusts for a lower tax rate.

All up, estimates for earnings per share are reduced by -1% in FY19 and raised by 3% for FY20. Rating is upgraded to Overweight from Equal-weight and the target is raised to $35 from $29. Industry view: Cautious.

Sector: Consumer Services.

Target price is $35.00.Current Price is $29.19. Difference: $5.81 – (brackets indicate current price is over target). If ALL meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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