Investors may have overreacted to the Competition and Markets Authority's investigation into Trainline (LSE:TRN), that's according to stockbroker Shore Capital, with the bullish broker arguing the sell-off implies damage that the broker says is not yet supported by acts.
Trainline, the UK-based rail and travel ticketing platform, has seen its shares fall around 19% since lastTuesday's announcement of the CMA probe, wiping out around £185m of market value.
Shore Capital repeated a Buy rating with a 400p price target, compared to a prevailing share price of close to 200p.
Analyst Katie Cousins calculates the decline effectively prices in a permanent £30m reduction in EBITDA, a level of impairment she describes as an aggressive assumption given what is currently known.
The CMA's inquiry, opened under the Digital Markets, Competition and Consumers Act 2024, centres on whether mandatory fees appear in the upfront price or emerge later in the booking process, so-called drip pricing, rather than on the existence of the fees themselves.
Shore Capital stresses the regulator remains in an information-gathering phase and has not concluded any breach of consumer law, drawing a clear line between scrutiny of fee presentation and a challenge to booking fees as a business model.
The broker points to Trainline's technology platform, customer features, international expansion and low valuation as supports for the recommendation.
Trainline has said it has been in contact with the CMA for several months and is already adjusting how certain fees are displayed while the investigation proceeds.
