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Canaccord raises target for Trainline as strike headwinds ease
(Sharecast News) - Canaccord Genuity has hiked its target price for Trainline ahead of the booking platform's trading next month after pencilling in a less-than-expected impact from recent rail strikes. There were 24 strike days in Trainline's current financial year ending 28 February 2024, which Canaccord estimates had a negative impact of £120m on net ticket sales, equal to 2% of the full-year number.
"With only one UK Rail union (ASLEF) still striking and at a reducing rate, we believe the negative impact from strikes is reducing," the broker said.
Meanwhile, Canaccord said that Trainline's international operations are becoming "less of a drag" with strong growth seen in Spain and Italy. A reduction of marketing spend in Germany and France due to less new carrier competition should also help earnings too.
The broker has lifted its EBITDA forecasts for the financial years ending 2024, 2025 and 2026 by around 2%, helping its target price for the stock up to 428p, from 371p previously, as it maintained a 'buy' rating.
Canaccord said Trainline has significant future growth drivers over the the medium-to-long term, which include: "1) online shift across the UK and Europe; 2) product and marketing leadership resulting in continued market share gains; 3) total addressable market expansion from the deregulation of European rail travel; 4) innovation such as e-tickets and digital season tickets driving growth; and 5) RPI linked rail pricing."
The stock was down 1% at 308.2p by 1051 GMT.
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