MANCHESTER United’s £37m record signing of Juan Mata from Chelsea, as well as the team’s current run of indifferent form, has prompted Deutsche Bank to downgrade its price target for the listed company’s shares from $21 to $16.
“We now think we were too conservative in our player cost outlook,” says the Deutsche research team led by Doug Mitchelson.
Deutsche says that although positive catalysts remain, “these must be balanced against team performance risk.” The combination of higher player costs and a worse than expected performance has hit earnings projections. Deutsche was assuming a third place position in the Premier League for United and a quarter-final place in the European Champions League but notes that the prospects of reaching both targets “are becoming increasingly dim.”
Mata makes his debut tonight for United in their home match against Cardiff City. His purchase is expected to be the first of a number of new signings aimed at revitalising a squad that appears to be in need of strengthening.