DfT's cancelled ticketing app a "clear positive" for Trainline, says JP Morgan

(Sharecast News) - News that the Department for Transport has canned plans to create a Great British Railways ticketing website and app is a "clear positive" for booking platform Trainline, according to JP Morgan, removing a key overhang on the share price. In a research note reiterating its 'overweight' position on the stock, the bank said Trainline had faced growing investor concern regarding the potential emergence of a new, online retail competitor in the UK, with its 62% market share under threat.

However, in an unexpected release on Thursday, the DfT announced it was pulling the proposals first outlined in May 2021.

"We are confirming that we are not pursuing plans to deliver a centralised Great British Railways online rail ticket retailer," the DfT said. "Train operators will continue to retail to passengers online alongside existing third-party retailers while we develop measures to spur further competition in the online rail ticket retail market to make things better for passengers."

JP Morgan said: "The proposed withdrawal removes a key overhang to Trainline's investment case, where building investor concerns have been around changes in UK rail regulation (a new GBR app) which drove a de-rating relative to classified peers, and overshadowed strong passenger momentum and improved operational delivery, in our view."

The bank acknowledged that some investors will likely be concerned about the emergence of Uber as an online ticket aggregator However, "indications continue to suggest little in-roads on traffic share to-date, and we expect investor focus to now turn to Trainline's strong passenger momentum and improved operational delivery."

JP Morgan has a 350p target price for the stock, which was called to open on Friday with strong gains from the previous close of 283p.