(Bloomberg) -- Manchester United fans are suffering another indifferent season, but the outlook for the football club’s owner is rosy, according to analysts at UBS Group AG.
Ivar Billfalk-Kelly and Artem Prokopets recommend buying shares of Manchester United Plc as new ownership drives a return to profitability. They highlighted the company’s focus on cost-cutting alongside a revenue base that’s unrivaled in the Premier League and gave the stock a $23 price target that suggests 30% upside from Monday’s close. Shares in the company rose 1.1% on Tuesday.
An eventual return to the lucrative UEFA Champions League could spur an even more significant rally, they added.
“This is by no means a foregone conclusion given the recent poor performance but the new manager provides a potential turning point,” the UBS analysts said in a note to clients.
Man United, which sits 13th in the 20-team Premier League, announced the hiring of Ruben Amorim from Sporting Club de Portugal last month. That’s after billionaire Jim Ratcliffe purchased a stake in the club a year ago.
UBS said Man United currently trades at 4.4 times enterprise value to sales, compared with an average of six times for US-listed sporting peers.
“With continued interest in sports teams and leagues from private equity and wealthy individuals seeking trophy assets, we see the valuation of Manchester United as well underpinned,” they said.
--With assistance from Subrat Patnaik.
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