Trainline’s initial public offering has performed “just right” given the risks facing the business, according to analysts at Peel Hunt.
The UK rail and coach booking app floated on the London Stock Exchange last month with an offer price of 350p each, at the top end of its target range, valuing the company at £1.68bn.
The shares ended the first day of trading at 411p and are now trading at 413p a piece.
READ: Trainline steams ahead as it begins trading above IPO price
Peel Hunt initiated coverage of the stock on Wednesday with a ‘hold’ rating and target price of 400p.
The broker said it thinks the equity is “a great new addition” to the listed pure-play marketplace group but thinks it faces competition from Google.
Google 'could launch train booking service'
Given the popularity of Google Maps, Peel Hunt sees the online giant potentially launching its own train booking service.
Google already works with companies such as accesso and Bookatable to allow consumers to buy tickets or reserve tables through Google Maps with the ‘Reserve with Google’ service.
“Given that Google is trying to increase its relevance in all things information-based we wonder when it will make sense to book train tickets directly on Google,” Peel Hunt said.
Other rivals Trainline needs to watch out for are European transport booking service Omio and flight booking app Hopper, the broker said.
Peel Hunt believes a review of the UK railways by Keith Williams, the deputy chairman of John Lewis Partnership and former chief executive of British Airways, could disrupt the industry.
Trainline 'may need vertical integration'
It noted that other tech platforms have started vertical integration with the addition of complimentary services as competition intensifies.
Just Eat has launched its own delivery service to fend off competition from UberEats and Deliveroo while Citymapper trialled a taxi service, which is now defunct.
“It hasn’t always been a smooth ride in this ‘winner takes all’ environment; none of these shifts were pre-empted, and there aren’t many platform plays that have made a big success outside their home geography, so we wonder what vertical integration may Trainline need to do?,” Peel Hunt said.