UBS initiated research coverage on shares of two major European football clubs, Manchester United (NYSE:MANU) and Juventus, with contrasting perspectives.
The financial services firm sees a positive outlook for Manchester United, citing a robust revenue base that is expected to enable the club's return to profitability and competitive performance. As a result, UBS has set a price target of $23 per share and recommends a "Buy" rating for the club's stock.
"We see the real upside to the equity story linked to an eventual return to the more lucrative Champions League, a scenario which could potentially drive revenues to £800m," analyst Ivar Billfalk-Kelly wrote in a note.
"With a superior revenue base than most peers and thus an ability to spend more on talent, we assume performance will turn around leading to a Champions League participation from the FY28 season."
UBS believes this financial strength, combined with new management's focus on cost management, positions the club to eventually compete for top spots in the Premier League and Champions League. The firm also notes the high interest in sports teams from private equity and wealthy individuals, which supports the club's valuation.
The firm's outlook is underpinned by the potential for improved sporting performance and a return to net profitability for the club.
In contrast, UBS is less optimistic about Juventus, starting their research coverage with a "Sell" rating and a price target of €2.90 per share.
While acknowledging Juventus' strong on-field performance and higher revenue base compared to Italian peers, UBS anticipates limited opportunities for significant revenue growth.
"We see future profitability dependent on either 1) a sustainable return to the elite of European football with better performance in European competitions which, given a lower revenue base than many European peers, is likely to be difficult to achieve, or 2) higher cost reduction than we forecast without sacrificing performance – a fine balance that we think could be challenging to achieve."
UBS forecasts a broadly break-even result for Juventus over their forecast period and notes that while revenues are expected to exceed €500 million, the scope for further growth appears constrained.