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Investing.com - BofA Securities initiated coverage on Trainline Plc. (LON:TRN) (OTC:TNLIY) with a Buy rating and a price target of GBP4.37. According to InvestingPro data, the stock appears undervalued based on its Fair Value assessment, with shares currently trading at $6.81 after declining 20.35% year-to-date.
The firm added Trainline to its SMID Cap Europe Best Ideas List, citing the company’s high-quality business fundamentals, including a projected 2025 return on invested capital (ROIC) of 15.7% and rising. InvestingPro data shows Trainline’s current ROIC stands at 21%, with an impressive overall Financial Health score rated as "GREAT."
BofA highlighted Trainline’s free cash conversion of above 100% and plans for £650 million in share buybacks by 2030, representing significant shareholder value potential. This is supported by InvestingPro data showing a strong free cash flow yield of 13% and levered free cash flow of $181.73 million for the last twelve months.
The research note addressed market concerns about UK rail nationalization and artificial intelligence impacts, which BofA described as "overdone," noting that Trainline’s 12-month forward price-to-earnings ratio of 11x has more than halved since mid-2024.
BofA Securities calculated a potential total shareholder return of 73% based on its discounted cash flow analysis, with analyst Tim Ramskill stating that "upside risks" identified in the firm’s key debates "are underpinned by management execution and should drive continuation of the upgrade cycle."
In other recent news, Trainline Plc. released its half-year 2026 trading update, reporting net ticket sales, revenue, and adjusted EBITDA slightly exceeding market expectations. The company maintained its fiscal year 2026 guidance for net ticket sales and revenue, while upgrading its adjusted EBITDA growth forecast to the upper end of the previously stated 6-9% year-over-year range. This update has led Berenberg to reiterate its Buy rating on Trainline, with a price target of GBP4.90, highlighting the company’s growth potential. These developments reflect the company’s strong performance in the first half of the fiscal year. Investors may take note of these figures as they consider their investment strategies. The emphasis on adjusted EBITDA growth suggests a focus on operational efficiency. Trainline’s ability to meet and exceed market expectations could be seen as a positive indicator by market analysts.
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