2 reasons why the Trainline (TRN) share price just popped

Trainline (LON: TRN) share price was shining in London on Friday as it surged by more than 17% in its best day since September. The shares surged to a high of 350p, its highest point since November 2022. They have soared by over 53% from their lowest level in 2023.

Trainline stock price popped after the UK government scrapped a plan to launch its competitor. The government has been working on launching a centralised Great British Railways online rail ticket retailer in a bid to raise revenue and reduce the cost to customers.

The service would have provided direct competition to Trainline, a company that provides train and bus tickets in the country. As a result, analysts at Barclays upgraded their outlook for the stock from sell to neutral. 

In most periods, stocks tend to jump after being upgraded by a major bank like Barclays. Other analysts from companies like JP Morgan, Berenberg, and Shore Capital have an optimistic rating on the stock.

Therefore, there is a likelihood that Trainline business will continue doing well in 2024 as the recovery intensifies. The most recent results showed that the company’s net ticket sales jumped by 23% to £2.6 billion in the first half of the year. 

Revenue rose by 19% to £197 million while its operating free cash flow rose by 166% to £77 million. As I wrote in this report, free cash flow is one of the most important metrics in a company because it shows the funds that remain after a company spends its profits.

The company has other catalysts that could improve its profitability in the future. For example, it is investing in more digitisation of its services, which has led to more industry penetration. Also, it is growing its market share in other European countries like Spain and Italy.

Trainline believes that its revenue will continue growing this year. Management sees its revenue growing by between 15% and 20% this year while its adjusted EBITDA being between 2.15% and 2.25% of ticket sales.

The other potential catalyst for the Trainline share price is the growing popularity of public transport as governments in Europe implement tighter emissions standards. In London, the Sadik Khan government has expanded the ULEZ plan that charges higher emitters.