Transferring Analyst Coverage of Narrow-Moat-Rated Aristocrat, Fair Value Estimate Unchanged

We transfer coverage of Aristocrat Leisure and maintain our AUD 26.00 per share fair value estimate. We reiterate our narrow moat, high fair value uncertainty, and Standard stewardship ratings and continue to forecast 14% EPS growth on average for the next five years. Our forecasts hinge on further market share gains in North American outright sales. We believe the firm can reach 30% by fiscal 2023, compared with roughly 25% currently. Additionally, the North American class III gaming operations installed base (leased machines) should continue to grow strongly. In our opinion, this is the most lucrative category and defensive segment and we forecast Aristocrat to capture a long-term market share of around 45%, compared with the current 38%. The firm’s ongoing commitment to game design and development expenditure is a key driver.