GGRAsia – JP Morgan ups Aristocrat profit forecast 8pct for FY2022

JP Morgan ups Aristocrat profit forecast 8pct for FY2022

May 20, 2022 Newsdesk Latest News, Top of the deck, World

A brokerage has raised by 8 percent its 2022 financial-year profit estimate for slot machine maker and online gaming content provider, Aristocrat Leisure Ltd, following the firm’s release on Thursday, of its interim results.

In a memo that day, JP Morgan Securities Australia Ltd said it now thought Aristocrat’s net profit after tax and amortisation (NPATA) for financial year ending September 30, would be nearly AUD1.08 billion (US$756.3 million), versus its previous forecast of AUD996.9 million.

The institution also upped its outlook for the Australia-listed firm’s annual earnings before interest, taxation, depreciation and amortisation (EBITDA) to nearly AUD1.84 billion, up 2.9 percent from a previous estimate of AUD1.78 billion.

But JP Morgan expected Aristocrat’s annual revenue for financial-year 2022 would be 4.0 percent lower than its previous AUD5.91 billion estimate, at AUD5.68 billion.

“Our earnings changes largely reflect [Thursday’s] beat on our first-half 2022 estimates, being slightly offset by some adjustments to our digital-bookings assumptions,” said JP Morgan’s analysts Don Carducci and Michael James.

This was on the basis that the “pipeline” for digital game releases was to be “pushed further into financial year 2023,” the analysts wrote.

Currently, Aristocrat offers online social games via its Pixel United division. The online offer is due to be supplemented before calendar-year end, by some real-money online gaming operations in the United States, said Trevor Croker, Aristocrat group chief executive and managing director, as cited in a Thursday filing.

Aristocrat had not only AUD3.3-billion in liquidity, but also “extremely strong” free cash flow generation, and a “solid growth pipeline across multiple avenues”, suggested JP Morgan.

Real money gaming was a “missing piece for the company, albeit the market will see some semblance of the strategy within a year,” said the brokerage.

“Given ‘the big stick’ is roughly AUD3.3 billion of liquidity, we are confident Aristocrat Leisure can strike hard when and where necessary,” in terms of developing its business, the analysts remarked.