Trainline an 'underappreciated equity', says Berenberg

(Sharecast News) - Berenberg said on Wednesday that Trainline is an "underappreciated equity" and that it continues to view the company as a top pick in its coverage following full-year results on 7 May.

The bank, which maintained its 'buy' rating and 490p price target on the shares, noted that they are down 7% since the results and 40% year-to-date, due largely to concerns around the UK competitive and regulatory landscape.

"While acknowledging there is unlikely to be a big-bang-type catalyst that removes these concerns, we think they are overdone," it said.

"Following the year-to-date de-rating, the shares trade on 12x FY26E price-to-earnings, which we think provides an attractive risk/reward for investors, and ultimately continued strong operational performance will support a re-rating over time," Berenberg said.

It pointed out that in FY25, UK Consumer net ticket sales growth continues to be robust at 13% and International Consumer is now profitable, which is a key milestone for the division.

"FY26E guidance points to 6-9% adjusted EBITDA growth, and combined with the ongoing share buyback, we forecast 15% adjusted EPS growth," the bank said.

Berenberg highlighted attractive cash generation and potential for further shareholder returns. It noted that Trainline has now repurchased �154m of shares since September 2023 and that leverage at year end was 0.5x and there is an ongoing �75m share buyback.

"We forecast �81m of free cash flow in FY26E and we think there is scope for additional buybacks following the completion of the current buyback," it said.

At 1320 BST, the shares were up 6.1% at 268.80p.