Analyst: Aristocrat not fully appreciated
Jefferies Equity Research analyst Kai Erman has declared that Aristocrat Leisure was “under-appreciated” for its execution of the social-casino business, as it completes its strategic realignment via the sale of mobile-gambling business Plarium.
This finding, made in a February 12 investor report, came on the same day that Aristocrat announced it had restructured its Big Fish Games subsidiary.
The latter will be part of Aristocrat’s social casino portfolio “with a focus on evergreen titles (no new game development),” according to Erman.
He added that the decision to restructure Big Fish rather than divest of it meant that Aristocrat could achieve a 7.5 times cash flow valuation.
Erman said that major investment in non-social casino titles had been significantly negative for Aristocrat and that its “decision to focus on evergreen titles is sensible in the absence of a divestment.”
Aristocrat’s Pixel Madness unit will be retired and no longer report results, and Plarium will be carried henceforth as a discontinued operation. Erman continued, “Given the ongoing strategic review, we expect operating performance in Pixel United to date has not been appreciated.”
The analyst predicted 4% topline growth for Aristocrat, given recent increases in its market share.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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