Shore Capital sees huge upside at Trainline after strong first half

Trainline's shares were up 10% at 370.4p by 1052 GMT after the company said it expects net ticket sales to increase by 12-14% in the year to 28 February 2025, up from a previous target of 8-12% growth, while revenue growth is tipped to be 11-13%, up from 7-11% previously.

The upwards revisions come after a 14% increase in net ticket sales to £3.0bn in the first half ended 31 August, with revenues rising 17% to £229m. Adjusted EBITDA meanwhile rose 44% to £82m.

"We are pleased to see the update this morning and continue to see Trainline as a dominant player within the UK rail network, set to benefit from the increasing digitalisation demand from consumers," Shore Capital said in a research note.

"Beyond this, we believe the international opportunity, which is building, is not factored into the current group multiple."

The broker said Trainline trades at an enterprise value-to-EBITDA ratio of just 10, a discount to the wider UK platform sector despite expectations of strong double-digit adjusted profit growth in the coming years.

Shore Capital's fair value calculation for the stock is 465p, 38% ahead of Friday's closing price of 337p.