Jefferies analyst anticipates robust growth for Aristocrat Leisure Industries amidst turmoil in the gaming sector.
New and Improved:
The Gaming Industry's Titans: Aristocrat vs Light & Wonder
In the bustling world of US gaming, two powerhouses stand tall - Aristocrat Leisure and Light & Wonder. Let's delve into the clash of these titans, particularly focusing on their Q4 2021 performances and beyond.
Jefferies Equity Research analyst, Kai Erman, recently weighed in on the situation, praising Light & Wonder for its "land-based momentum," but remaining bullish on Aristocrat Leisure. Erman foresees Aristocrat shipping up to 5,800 leased-game units this year, a figure 10% higher than the market consensus.
Erman's optimism for Aristocrat stems from his belief in the company's market share growth and the anticipated success of games such as Phoenix Link, Baron, Dollar Storm, Dragon Link, and Buffalo. However, he admits that Light & Wonder's market share, currently at a notable 37%, casts a long shadow.
Regarding Aristocrat's market share in for-sale units, Erman notes a slight decline, attributed to weaker performances in tribal casinos and "slight share leakage." Nevertheless, he assures that the revenues derived from leased games, along with "material share gains," more than compensate for this softness.
In the realm of social casinos, Aristocrat continues to racking up market shares, growing six times faster than Light & Wonder, despite the latter's strong monetization and engagement. Erman acknowledges that measuring iGaming share is tricky but predicts minimal impact from Light & Wonder's execution and momentum due to Aristocrat's novice status in this field.
Erman's AU$85 price target for Aristocrat stock remains, bolstered by the company's current share gains despite doubts about their sustainability due to Aristocrat's market leadership position. The analyst remains optimistic about Aristocrat's near future, citing the performance of new games and the investment in product development to defend market position.
Looking ahead, the landscape of the gaming industry is expected to witness shifts with new mergers, such as the upcoming Everi-IGT amalgamation. This entity could potentially surpass both Aristocrat and Light & Wonder in terms of market share. Despite this, Aristocrat's strong market presence and technology investment are likely to keep it competitive.
In conclusion, Aristocrat Leisure maintains a robust position in the North American gaming market, but the terrain is becoming progressively competitive. The upcoming Everi-IGT merger could reshape the market dynamics in favor of other players. Yet, Aristocrat's solid market presence, significant R&D expenditure, and new product pipeline position the company well for future growth.
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*To unravel the market share of Aristocrat Leisure and Light & Wonder in the United States gaming industry, we must scrutinize available data and trends.
Trends
- Aristocrat Leisure: In the current climate, Aristocrat's North American ship share stands approximates 28%, denoting considerable growth from about 13% in 2012[2]. This indicates a strong market presence, particularly in the electronic gaming machine market.
- Light & Wonder: Although specific market share data for Light & Wonder (previously known as Scientific Games) is not detailed in the provided sources, recent analyses suggest that the forthcoming merger of Everi and IGT could generate an entity with a larger installed base and potentially higher market share than both Light & Wonder and Aristocrat in North America[3].*
- Investing in technology could be crucial for companies like Aristocrat Leisure to maintain their market position, as the landscape of the gaming industry is expected to evolve further with potential mergers, such as the upcoming Everi-IGT amalgamation.
- On the subject of technological advancements, it's interesting to note that smartphones and gadgets are increasingly becoming platforms for investing in the gaming industry, offering a new avenue for businesses to focus on, beyond traditional land-based casinos.
- In the realm of finance, the performance of Aristocrat Leisure's new games and investments in product development are key factors that Jefferies Equity Research analyst, Kai Erman, considers when measuring the company's potential for growth, particularly in the social casinos sector, where Aristocrat is growing six times faster than Light & Wonder.
