With little end in sight in the stand-off between rail unions, the network operators and the Government train tickets platform Trainline (TRN) will be tearing its hair out.
2022 was supposed to be the year when the company benefited from the return to some sort of normality as Covid restrictions were lifted. At first that looked to be the case as the shares hit highs above 400p over the summer.
However, the industrial action which started this autumn, continued into winter and is now hitting the festive period has undermined the recovery and Trainline now trades at 266p.
First half results showed sales more than doubled to £2.16 billion but with more strikes planned for January there is a risk this becomes more than a short-term headwind. The lack of reliability could lead to reduced appetite for rail travel in the longer term, with lower ticket sales taking a bite out of Trainline’s revenue.
Peel Hunt analyst James Lockyer has warned that: ‘The strikes have intensified and are set to continue in the new year. This directly impacts ticket sales for Trainline.’
WHY SOME ANALYSTS REMAIN POSITIVE
At least two analysts think investors might have become overly negative about the story. In November Berenberg commented: ‘We think that Trainline is a business that remains misunderstood by much of the market. The perception of regulatory risk in the UK is vastly overdone, as we have discussed in prior notes.
‘Perhaps even more importantly, the opportunity Trainline has to become a dominant platform across all of Europe continues to be overlooked.’
Despite estimating a £2 million to £3 million impact for each week of strikes Liberum analyst Ciaran Donnelly noted Trainline ‘has good earnings momentum in the UK business, international growth is coming through and it should be resilient in a consumer downturn in 2023’.
