Trainline’s discount to the market “unwarranted”, says Shore Capital

(Sharecast News) – Trainline is being undervalued by the market, according to broker Shore Capital, which sees huge upside for shares of the rail and coach booking platform.
The broker has initiated coverage of the stock with a ‘buy’ rating and a 320p target price, compared with Wednesday’s price of 247p, up just 0.3% on the day.

Shore Capital said that, if you exclude international operations from calculations – which have negatively impacted EBITDA since Trainline’s IPO in 2019 – the stock trades on an enterprise value-to-EBITDA ratio of just 9.6x. This is an “unwarranted discount” compared with the sector-average EV/EBITDA at 12x.

“We believe the group has a positive outlook, driven by our assumptions of long-term robust revenue growth, margin accretion and good free cash flow generation, and our cash flow-derived analysis suggests a fair value of over £3 per share, c14x EBITDA,” the broker said.

Shore Capital said the current valuation “fails to account for the dominant coverage and market share opportunities from increased digital ticketing trends, as well as improving financial metrics and B2B scaling.”

What’s more, when including international operations in the valuation model, Shore Capital estimates that this could deliver another 40p to the share price.

It expects Trainline’s international operations to break even in 2025 as a result of rapid revenue growth and potential market share growth. “If, however, the group can increase its market share [internationally] from mid/high-single digits to a similar exposure in the UK, c.30%, we see scope for this to go up to £1.40 at least for International.”

Related Articles

Sign up to the Wealth DFM Newsletter

Please enable JavaScript in your browser to complete this form.
Name

Trending Articles

IFA Talk logo

IFA Talk is our flagship podcast, that fits perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast – listen to the latest episode

Wealth DFM
Privacy Overview

This policy explains how IFA Magazine collects, stores use, and shares personal information (including but not limited to information from which you can be personally identified such as your name, address, job title, company, email address, or telephone number) and information about your visits to the network, including the pages you view, the links you click and other actions taken in connection with www.ifamagazine.com, www.gbinvestments.co.uk, www.robopromedia.com, www.mvpromedia.com.

IFA Magazine Publications Limited may update this Policy at any time. It is your responsibility to check for updates to this Policy, as your continued use of the website denotes an acceptance of this Policy. Unless stated otherwise, IFA Magazine Publications Limited’s current Policy applies to all information that IFA Magazine Publications Limited has about you and your account.