The first Manchester United Plc (NYSE:MANU) earnings report of the new English Premier League season was "mixed" but had more to like than dislike for analysts at Jefferies.
Results for the three months to September 30 saw total revenue fall 9% year on year and adjusted profit (EBITDA) up 2%, respectively ahead of and below the broker's estimates.
Management reiterated their full-year outlook, announced a new global sponsorship with Heineken and highlighted the post-period appointment of Ruben Amorim as head coach this month parting ways with Erik Ten Hag 14 games into the season, late last month.
The sacking of Ten Hag, who was awarded a contract extension in July and spent over £600 million in transfer fees during his tenure, is reportedly set to cost the club in the region of £13.5 million.
Jefferies, which has a $26 price target on the shares versus the last close price of $17.21, summed up the results as mixed but showing signs of a "turnaround in early innings", borrowing an analogy from US sports.
What analysts said they liked in the quarter was sales beating expectations, despite a reduced summer tour with three fewer fixtures, and that guidance for the year to June 2025 was reiterated for sales in the range of £650-670 million and adjusted EBITDA in the range of £145-160 million.
The Man Utd brand "remains strong", the analysts said, reckoning that the club has over a billion global fans and around 12% of the entire global population.
"We expect fan engagement initiatives to pay dividends in the long term," they added, with the company highlighting that matchday revenue remained resilient despite three fewer fixtures, offset by strong hospitality and matchday VIP revenues, plus the sponsorship with Heineken until 2028 and renewed global sponsorships with DHL, HK Jockey Club, and Konami.
What the analysts did not like was limited to EBITDA of £24 million being well short of the estimated £32 million.
Looking ahead, the Jefferies team were optimistic about the potential for long-term value generation for shareholders as the club's recent leadership "underscores a shift toward experienced European football on and off the pitch, and a real opportunity to improve team performance and club growth".
"The team is well-known and should continue to perform at a high level over the LT. Growing monetization opportunities appear in reach, and club profitability has come to the forefront."