Why is Jefferies bullish on Trainline stock?

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Investing.com -- Jefferies initiated coverage of Trainline PLC (LON:TRNT) with a Buy rating and a price target of £3.50, stating the market has undervalued the rail ticket retailer amid concerns about artificial intelligence disruption and UK rail nationalization.

The firm said Trainline’s current equity pricing implies negative 1% perpetual declines for the UK segment and assigns zero value to the International segment. Jefferies expects the UK segment to achieve approximately positive 1% average growth and forecasts the International segment will reach high-single digit percentage net ticket sales growth medium-term, up from approximately 5% in fiscal year 2026.

Jefferies said Trainline’s position as the incumbent market-leading operator provides advantages that will allow it to benefit from agentic AI rather than face disruption. The firm also said the planned Great British Railways app will not replicate Trainline’s capabilities in discovery, consideration, conversion, fulfillment and after-sales.

The research firm said Trainline holds commanding positions in the four largest European Union markets, which represents a platform for long-term growth as a new wave of rail liberalization approaches. Jefferies said it expects more volatile EBITDA as the company executes targeted marketing investments.

Trainline trades at a 2025-2028 price-to-earnings-growth ratio below 1x, while comparable incumbent market-leading operators trade at approximately 1.4x in Europe, according to Jefferies. The firm’s estimates are 3% to 9% ahead of consensus on EBITDA for fiscal years 2028-2029.

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