Credit Suisse expects, in FY21, Aristocrat Leisure will pay a commission of around $700m to mobile platforms such as Google Play or the Apple App Store.
A -5% reduction in mobile platform fees over time from the current 28% is calculated to lift valuation by $6. Also contributing to reduced platform fees, albeit a smaller component, Microsoft is cutting commissions to 12% for 30% and Aristocrat Leisure is already a beneficiary.
Global regulatory pressure on fees is a tailwind yet Credit Suisse only incorporates the prospect into its target, leaving earnings estimates unchanged at this point. Outperform rating maintained. Target rises to $50.30 from $44.25.
Sector: Consumer Services.
Target price is $50.30.Current Price is $46.84. Difference: $3.46 – (brackets indicate current price is over target). If ALL meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).