Trainline PLC (LSE:TRN) could see its valuation expand if it is able to successfully execute its expansion into European markets, analysts at Deutsche Bank believe.
Gareth Davies at the German Bank issued the train ticket provider a “buy” rating in his most recent research note, citing the expansion into Spain, Italy, Germany and France as a key driving force.
In Italy and Spain, Trainline is already “gaining momentum”, offering a convenient booking platform at similar prices to direct railway operators.
Davies believes that as reporting in these countries becomes more detailed it allows the market a “more granular valuation” of the separate businesses.
Additionally, the Deutsche Bank analyst reckons the opportunity of the developing European business will begin to be appreciated by the market more as time goes on.
“France and Germany offer significant future potential as competition enters each market,” Davies added.
Back in the UK, Trainline is expected to outperform the market due to the growth in the use of digital tickets for train journeys, analysts added.
Last year, digital ticketing accounted for 47% of the market. Looking forward, Davies is confident it could grow to at least the 60s.
Deutsche Bank targets a share price of 470p for Trainline, representing more than a 42% premium to its current market value.