On Thursday, Exane BNP Paribas (OTC:BNPQY) changed its stance on Trainline Plc (LON:TRNT) (TRN:LN) (OTC: TNLIY), upgrading the stock from Underperform to Neutral and adjusting the price target to £3.20 from the previous £2.85. This revision follows Trainline's robust first-half results, which led to a significant revision of the company's forecasts.
The upgrade reflects Trainline's achievement of a record UK market share and substantial growth in high-margin ancillary revenues. Despite these positive outcomes, the firm anticipates headwinds for the next year, expressing skepticism about UK revenue growth in FY26.
The analyst notes that while international revenues have seen a boost from higher take rates, the stagnant state of rail liberalisation in Europe casts doubt on the consensus forecasts for double-digit growth in net ticket sales for the following year.
Trainline's shares have experienced a decline of approximately 13% over the past six months. Currently, the stock is trading in line with its UK-listed industry peers. The firm believes that the risk/reward balance for Trainline looks fair at this point. However, the limited growth projected for the next year makes it challenging to anticipate significant near-term upside for the stock.
In summary, Exane BNP Paribas acknowledges Trainline's recent performance but remains cautious about its growth prospects amid anticipated headwinds and uncertain European market conditions. The analyst's comments suggest a conservative outlook for the company's revenue growth potential in the near future.
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