Shares of FTSE 100-listed Trainline PLC (GB:TRN) are surging over 15% in morning trade as of writing, after touching a new 52-week high of 325.40p today. Shares rallied as the Department for Transport (DFT) scrapped its May 2021 proposal to launch a new centralized Great British Railways ticketing website and app. The proposed app would have posed a massive competition to Trainline’s ticketing business.
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Trainline remains one of the most downloaded rail travel apps in the U.K. In Trainline’s first half FY24 results, its group net ticket sales rose 23% year-over-year while revenue grew 19%. The company is making strategic moves to digitize the rail ticketing experience. Plus, it is expanding to other countries like Spain and Italy. Year-to-date, TRN shares have gained 18.1%.
Analysts Welcome DFT’s Withdrawal
Following the announcement, Barclays analyst Andrew Ross upgraded TRN stock to a Hold from a Sell rating, citing the news as a “thesis changer.” Ross increased the price target to 355p (8.4% upside potential) from 270p.
Further, J.P. Morgan analyst Marcus Diebel noted that the DFT’s withdrawal removes a looming threat to Trainline’s investment thesis. The existence of a new online ticketing company in the U.K. would have seriously impacted Trainline’s market share, Diebel added.
While some investors might be concerned about American ride-hailing service provider Uber (NYSE:UBER) emerging as an online ticket platform, the analyst noted that data continues to suggest little progress in terms of traffic share so far. Consequently, he expects investors’ attention to move to Trainline’s solid passenger momentum and improved operational delivery.
Diebel reaffirmed a Buy rating on TRN shares with a price target of 350p (6.9% upside).
Is Trainline a Buy or Sell?
On TipRanks, TRN stock has a Moderate Buy consensus rating based on seven Buys, one Hold, and one Sell rating. The Trainline PLC share price forecast of 351.93p implies 7.2% upside potential from current levels.
