Deutsche's Manchester United warning: Mind over Mata

Manchester United's signing of Chelsea midfielder Juan Mata may have brightened the mood at OId Trafford, but Deutsche Bank has taken a dim view of the Spaniard's £37 million ($61 million) arrival and downgraded its target price for the soccer team.

Manchester United's manager David Moyes (L) poses with new signing Juan Mata (R)
PAUL ELLIS | AFP | Getty Images

With the team currently lying in seventh place in the English Premier League, 14 points off the top spot, Deutsche Bank has downgraded its price target for the company's New York-listed shares from $21 to $16, arguing that the combination of poor performances and higher player costs have hit earnings projections.

(Read more: Record Manchester United earnings lifted by sponsorship)

"We now think we were too conservative in our player cost outlook," said the Deutsche research team led by Doug Mitchelson.

The bank said that there were still positives at the club, which has won a record 20 League titles in its history, but that "these must be balanced against team performance risk."

(Read more: Hedge funds bet against Manchester United)

Deutsche had assumed the team would finish in third place in the Premier League along with a quarter-final finish in the European Champions League. However, it now accepts that the prospects of meeting both targets have become"increasingly dim" -- something agreed by most pundits and fans.

Mata is expected to make his debut tonight against Cardiff City, and manager David Moyes, who replaced Sir Alex Ferguson after his 26-year tenure, has said the Spanish midfielder is just the first piece in the "jigsaw" as he aims to rebuild the squad in the aftermath of Ferguson's departure.

(Read more: Manchester United manager Ferguson retires)

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley