Manchester United Plc (NYSE:MANU) shares are a ‘Buy’ but the football club’s revenue forecast of £690 million for the year is very unlikely to be achievable, that’s according to UBS analyst Ivar Billfalk-Kelly.
The Swiss bank’s own revenue forecast is pitched at £662 million, and it is based on United finishing the premier league in fifteenth place and doesn’t assume any European success.
Winning the Europa League will, however, see United hit and exceed this financial target.
“Manchester United is joint favourite among bookmakers to win the Europa League,” the UBS analyst said.
“Winning the tournament would ensure qualification for the lucrative Champions League next season and we estimate this could add at least c£60m upside to our £636m revenue forecast.”
Billfalk-Kelly added that each Premier League place higher than fifteenth is worth £2.8 million in revenue, whilst progress to the Europa semi-final would generate an extra £10 million, reaching the final and losing would add £16 million and winning the competition would bring in £21 million.
Qualification for the next season's Champions League, by winning the Europa, unlocks greater competition and matchday revenue next season.
The UBS buy recommendation comes with a $21.75 price target, which implies some 60% upside to the current share price of $13.59.