Pokie machine and gaming group, Aristocrat Leisure has boosted interim dividend 35% to 19 cents has share from 14 cents a share a year ago after reporting a solid performance for the six months to March 31.
Confidence in the existing game portfolio and operating momentum supports assumptions for the company's land-based business, Credit Suisse suggests. The broker values the stock on the assumption the company's predilection to invest will uphold an expanded market share.
Morgan Stanley believes the digital business is key to valuing the stock. Downloads in Big Fish continue to be weak and the launch of Toy Story Drop appears to provide little benefit, on the basis of monthly Sensor Tower data.
After a review of Aristocrat forecasts, the broker has decided digital, which currently represents some 28% of profit, may have reached an inflection point. Better growth is expected from FY20 and beyond supported by recent Social Casual releases and improvements in Social Casino.
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.
Game installation data in NSW have revealed Aristocrat Leisure has suffered a -35-40% decline in volumes and captured 55% ship share, its lowest share since 2015. NSW accounts for about half of Australia's gaming machine shipments.