Tags: Manchester | United | IPO | Price

Manchester United Analysts See Shares Rising $3 Above IPO Price

Tuesday, 04 Sep 2012 08:22 AM

 

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Manchester United Plc’s stock will increase to $17 over the next year, $3 above the price at which the shares started trading last month, according to the average analyst estimate compiled by Bloomberg.

At least five securities firms began coverage of the record 19-time English soccer champion today, analyst reports obtained by Bloomberg showed. They included Jefferies Group Inc., Credit Suisse Group AG and JPMorgan Chase & Co., all underwriters on the equity offering, and Deutsche Bank AG and Nomura Holdings Inc., which were also involved in the deal. Nomura gave a neutral rating, while the rest all recommended buying the stock.

Jefferies’ $20 price estimate was the highest in the group while Nomura’s $13 projection was the lowest. The shares closed at $13.30 in New York trading on Aug. 31. Manchester United spent $12.7 million in underwriting discounts and commissions, according to calculations based on details in its prospectus.

“Live sports programming is a winner in the new media landscape,” Randal Konik, an analyst at Jefferies in New York, wrote in a research report initiating coverage today. “With football the No. 1 sport in the world and Manchester United the most popular team, the company is poised to benefit immensely.”

Manchester United fell below its initial public offering price of $14 on the fifth day of trading on Aug. 16 and hasn’t returned since. The 134-year-old team and its U.S.-based owners, the Glazer family, raised $233.3 million after the shares were priced below the marketed range of $16 to $20 apiece.

Broadcast Deal

Manchester United went to market two months after the Premier League announced the biggest domestic soccer broadcast deal in history, securing 3 billion pounds ($4.8 billion) for a three-year cycle beginning next season. Days before it floated, the club also announced it had signed the richest jersey sponsorship in history with General Motors Co., worth $559 million. Still, the trend in soccer has been for revenue gains to be tracked by increases in player salary costs.

“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,” Michael Nathanson, an analyst at Nomura in New York, wrote in a report.

Manchester United beat Southampton 3-2 for its second victory in three league games this season after losing the opener 1-0 at Everton. Robin van Persie, signed for 24 million pounds from Arsenal in the offseason, scored all three goals at Southampton. His salary is 250,000 pounds a week, according to media reports.


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