Trainline hit as JPMorgan cuts estimates ahead of H1 results

Trainline shares were weaker on Tuesday as JPMorgan Cazenove slashed its price target to 387p from 517p and cut its estimates ahead of the company’s first-half trading update this week.

JPM noted that in general, train usage has been falling by around 90% in Trainline's first quarter and is currently tracking at about 25-35% utilisation, depending on the country.

"Today we factor in a slower recovery than we had previously anticipated and while things may change quickly in terms of train usage (vaccine, employees returning back to their offices) we stay on the sidelines for now and stay neutral," it said.

JPM’s 2020/2021 EBITDA estimates were cut from £27m/£74m to £-28m/£31m.

The bank said it sees room for improvement given a strong focus by the Department of Transport on controlling passenger numbers by implementing a pre-booking/e-ticket only policy, "with Trainline clearly a key beneficiary".

However, passenger numbers remain very volatile given recently increased social distancing measures. For example, it said UK train usage saw a rebound in August to around 40% of the previous year's level but has recently come back down to 30% into September.

At 0925 BST, the shares were down 3.7% at 375.60p.