Manchester United Plc (NYSE:MANU) presents a long-term growth opportunity despite mixed first quarter earnings, analysts at Jefferies believe.
The football team reported revenue of £157 million (about US$199 million), above the analysts’ estimates of £153 million (about US$194 million).
However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of £23 million (about US$29 million) came in below their estimate of £35 million (about US$44 million).
Following its worse-than-anticipated Champions League performance and a reduction in related broadcasting revenues, Manchester United also lowered its fiscal 2024 revenue and adjusted EBITDA guidance, the analysts highlighted.
“That said, we believe the recent transaction should provide more experienced European football leadership and an opportunity to improve team performance and club growth,” they wrote in a note to clients.
“The team is well-known and should continue to perform at a high level over the long term. Monetization opportunities should increase, and company margins should remain healthy. In our view, Manchester United should be a core holding for portfolio managers looking for companies that have growing underlying asset value (the team) and strong ongoing cash flow.”
The Manchester United brand remains strong, the analysts added.
“Manchester United has more than 1 billion global fans, and we expect fan engagement initiatives to pay dividends in the long term,” they wrote.
“The company highlighted continued record ticket sales and attendance, and the largest paid membership program of any global sports team, surpassing a record 400,000.”
The analysts gave the stock a ‘Buy’ rating and a US$26 price target.
Manchester United’s US-listed shares traded 0.7% higher at US$20.35 on Friday afternoon.