Liberum starts coverage of Trainline at 'buy'

Liberum initiated coverage of online ticket sales platform Trainline on Tuesday with a ‘buy’ rating and 400p price target.

The broker said Trainline is well positioned to benefit from the continued shift of ticket sales online, thus capturing incremental market share.

Liberum said Covid-19 has been an accelerant for many online businesses as consumers fundamentally shifted habits online permanently. Train ticket purchasing is not the most obvious benefactor, but early data suggests that online penetration has indeed increased since the emergence from the enforced Covid-19 lockdown, it said.

"Management highlighted that RDG data suggests that online penetration has increased to 50% versus circa 40% pre-Covid. This shift is expected to continue and, as online market share increases, the total addressable market for Trainline will increase," Liberum said.

It also said the risk from GBR’s app is not as extreme as the market expects, given the consumer offering wins in the realm of online platforms.

"There are risks associated with the equity story. Trainline’s TPS revenues are at risk over the medium term and there is uncertainty around the current commission structure in the UK. On balance, we believe the risk/reward equation is favourable and, with the shares trading on 5.7x CY22 EV/Sales and a circa 40% discount to its average since IPO, we initiate on a buy."

At 1010 GMT, the shares were up 3.8% at 309.75p.