SBD/September 5, 2012/Franchises

More Securities Firms Begin Coverage Of ManU Stock, Projecting Price Gain Over Next Year

Average analysts' valuations expect ManU stock to hit $17 per share in next year
EPL club Manchester United's stock price "will increase to $17 over the next year, $3 above the price at which the shares started trading last month," according analyst reports cited by Tariq Panja of BLOOMBERG NEWS. At least "five securities firms began coverage" of the club yesterday, including Jefferies Group, Credit Suisse, JPMorgan Chase, Deutsche Bank and Nomura Holdings. Jefferies' $20 price target was the highest among the group, while Nomura's $13 projection was the lowest. Jefferies analyst Randal Konik said, "Live sports programing is a winner in the new media landscape. With football the No. 1 sport in the world and Manchester United the most popular team, the company is poised to benefit immensely." However, Nomura analyst Michael Nathanson noted, "While there is much to like about the company's revenue model and near-term growth prospects, we remain cautious about the potential of greater-than-expected player cost inflation and valuation" (BLOOMBERG NEWS, 9/4).

QUESTIONS LINGER: The WALL STREET JOURNAL's Alexandra Scaggs noted analysts pointed out that ManU fans "are more likely to watch a team's games and buy its tickets if it wins, making success a key driver of revenue." Credit Suisse analyst Spencer Wang said, "On-field performance is a swing factor." Bank of America Merill Lynch analyst Bryan Goldberg said that "profit could rise 15% if the team wins a championship but could fall 9% if it does not" (WALL STREET JOURNAL, 9/4).
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