(Sharecast News) – Analysts at Canaccord Genuity reiterated their ‘buy’ recommendation and 271.0p target price on shares of Trainline due to their “depressed” valuation despite the “materially” improving outlook and potential for share buybacks.
In their opinion, high levels of free cash flow generation meant there was scope for up to approximately £500m of buybacks over five years.
That could suffice to boost earnings per share by 29%.
On their estimates, the company’s EPS was already set to double between fiscal years 2024 and 2028.
But if all the free cash flow generated were funnelled into buybacks then EPS treble over that same timeframe.
In a research note sent to clients they went on to add that ” the majority of the regulatory risk has subsided, with the key risk around commissions removed, while closure of some UK rail ticket offices are a possible tailwind.”
“We believe the threat of a Labour Government and any potential nationalisation of UK rail is a red herring, as c.20% of the UK rail network has already been quasi-nationalised, with no impact on Trainline.”
