Trainline has ‘growth potential’ despite national rival, says UBS
Trainline will continue to grow despite concerns surrounding the government’s rail policy, according to UBS.
Plans for a rival national rail ticket website have caused shares in Trainline to dip more than 30 per cent this year to date – despite continuing strong demand.
UBS said that although “market concerns” remained, recent data indicated “continued growth potential for the group.”
Rail passenger volumes are tracking at around 90 per cent of pre-Covid levels, up seven per cent year-on-year, according to Department for Transport (DfT) data.
Analysts forecast full-year market volumes at Trainline could increase by almost four per cent, which when combined with a five per cent increase in fares this year creates the scope for around nine per cent ticket sales growth.
The London-listed company is expected to provide guidance on 7 May.
Trainline reported a record £5.9bn in net ticket sales in March, driven by growth in its UK business. It also unveiled a fresh £75m share buyback programme.
But shares tanked more than 13 per cent following the announcement as investors feared the introduction of a state competitor.
UBS’s “Evidence Lab” data indicates Trainline’s UK app grew three per cent in March. However, it is also facing stiff competition from competitors across Europe, particularly in Spain and Italy.
“Our analysis indicates the group’s market share of users stsood at 86 per cent in March 25 and while this is still strong, it has fallen from around 90 per cent in March 24.”
Analysts have a Buy rating of 480p on the stock.