Barclays downgrades Trainline after late 2020 bounce

The bank said it has been cautious on Trainline for some time. It argued that the market is not putting enough weight on risks from the pace of a recovery in train volumes and regulation.

"To be clear, we aren't suggesting the upcoming government study will be a disaster for Trainline; our base case is that it is high-level and does not have a dramatic impact," it said. "But in the long term, we simply struggle to put a marketplace-type multiple on a business that, thanks to Covid-19, is now an intermediary in a regulated industry that loses money with essentially one end-backer, the government."

Barclays said Trainline adds significant value with its technology and has an impressive consumer product, but the bank doesn’t believe this is enough "to sustain margins in perpetuity".

At 1000 GMT, the shares were down 4.5% at 402.20p.