Underwriters give verdict on Man Utd float

City A.M. Reporter
JEFFRIES & Co, the lead underwriter in Manchester United’s initial public offering (IPO) last month, started coverage of the English football club with a “buy” rating yesterday, saying the company was poised to gain from increasing media appetite for live content.

“We view Manchester United as a key beneficiary of the changing media world where advertisers are willing to pay up for [live] content and want to associate with powerful brands that are recognised globally,” Jefferies analyst Randal Konik said in a note to clients.

Deutsche Bank also kicked off its coverage with a “buy” rating and a $17 target price, $3 less than Jefferies, saying it forecast strong revenue growth due to contracted increases, a renegotiation with kit maker Nike and improved team performance.

The club had a flat market debut on 10 August and its shares closed below its IPO price of $14 after the first week of trading. It closed at $13.19 yesterday on the Nasdaq.

Nomura Equity Research, also one of the book runners for the offering, took a more watchful approach as it remained cautious about greater-than-expected player cost inflation and valuation, starting the stock with a “neutral” rating.

Nomura said it was concerned that a large portion of the club’s revenue growth would be consumed by player salaries and transfer payments, and started the stock with a $13 target.