An analyst comment11 Jul 2024 10:02
Quote: "Trainline has seen its share price fall after the proposed Labour changes to the UK rail. Yet, in our view, the changes proposed by Labour help place Trainline as a key component within their new UK rail vision and should help remove uncertainty overhanging the stock," said Canaccord analyst Karl Burns.
"The visibility provided by Labour shows that third-party players like Trainline are "crucial" to the party's plans for the UK rail model. Labour will have to unpick over 30 years of privatisation and this will involve significant infrastructure, legal and technology changes that are likely to take 4-5 years, and with retailing websites and apps likely to be less of a focus initially, this should help underpin the Trainline business model, further strengthening its position and relationship with Labour in the UK," the analyst said. Meanwhile, increasing digitalisation should be positive for the company, given its already 60% share of the online market and 16m monthly active users.
"Trainline is a high-growth, high-margin, cash-generative platform business but is not currently valued as such [...] We think the current valuation significantly understates the growth and margin potential," he said. Their revised target price for Trainline went up to 455p and kept a 'buy' rating, quashing concerns around rail nationalisation speculation that has been weighing on the shares for some time.