Trainline PLC (LSE:TRN) is seeing competition pick up though usage of its ticket apps is rising notes UBS, which rates the shares a buy.
UK passenger journeys have risen to 88% of pre-Covid levels says the Swiss bank, from 79% a year ago, and for the full year market volumes might increase by almost 9%.
Combined with increases in fares of almost 5% this year there is scope for low teen net ticket sales growth for Trainline (vs guidance for 8-12% for the group).
Trainline app usage saw c7% growth in July, with peers likely gaining share and UBS notes that Trainline’s share of 88% in July is down from 89% in June 24, and 91% in July 23.
Rivals’ share of third-party ticketing app downloads had also risen to 40% in July 24, up from 32% on July 23.
Competitors include Trainpal (UK), Omio (Europe) and Rome2rio (UK, worldwide) with the Spanish market being the most advanced in terms of competition between train operators.
Here, UBS estimates Trainline accounted for 25% of downloads vs peers at 29% and rail operating companies at 46%.
“Competition from other third-party apps (primarily Uber) continues to be a point of discussion and a potential headwind to Trainline's future growth.
“We believe consumers are likely to be sticky but UBS Evidence Lab data does suggest that other platforms - primarily TrainPal - are gaining an increasing share of the market."
Even so, UBS has kept its 405p price target and buy rating given the growth in the market overall and the potential to pick up share in new areas such as France.
For the full year, UBS is forecasting revenues of £434 million and underlying profits of £146 million, both of which are ahead of guidance.
Shares eased 0.4% to 307.6p.
--Updates for UBS forecasts--