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Manchester United Shares Downgraded Following Rally

Sam Boughedda
Sam Boughedda trader
Updated 12 Dec 2022

Manchester United (NYSE: MANU) shares have surged over 55% in the last month, but one analyst last week downgraded the stock.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


The footballing giant’s share price surged from around $13 per share to a high of $23.35 at the end of November/start of December following news the club’s owners, the Glazer Family, were commencing the process to explore strategic alternatives for the club, which includes a potential sale. There were even reports that tech giant Apple was interested, although that was quickly knocked back by Apple-focused website MacRumors.

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY

However, following Manchester United’s earnings report last week, Deutsche Bank analyst Simon Davies downgraded Manchester United to Hold from Buy with a price target of $24, up from $16 per share.

Davies told investors that the club reported fiscal first-quarter results that were above expectations, but it also suspended dividend payments to conserve cash due to a material step up in leverage.

He added that the dividend suspension points to “an increased likelihood” that the Glazer family will agree to sell, but he sees a risk that “the family may have unrealistic value expectations.”

Manchester United posted an adjusted EBITDA of £23.6 million, compared to £11.2 million during the same period last year, while revenue came in at £143.7 million compared to £126.5 million last year, representing a 13.6% rise.

Looking forward, Manchester United said that for fiscal 2023, it is raising its guidance and expects revenues to be within a range of £590 million to £610 million, driven by solid matchday revenues, while adjusted EBITDA is seen between £125 million and £140 million, as a result of reduced player wage costs. The club recently agreed to terminate top earner Cristiano Ronaldo’s contract following an interview Ronaldo conducted, criticising the manager and owners.

Manchester United said that its quarterly results are expected to be impacted by the postponement of two Premier League matches, which were due to be played in Q1. However, they were delayed due to the Queen’s passing and the timing of the World Cup.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.