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Earnings Update: Here's Why Analysts Just Lifted Their Trainline Plc (LON:TRN) Price Target To UK£3.30

Investors in Trainline Plc (LON:TRN) had a good week, as its shares rose 10.0% to close at UK£3.12 following the release of its full-year results. It looks like the results were pretty good overall. While revenues of UK£189m were in line with analyst predictions, statutory losses were much smaller than expected, with Trainline losing UK£0.025 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Trainline

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the latest results, Trainline's ten analysts are now forecasting revenues of UK£282.0m in 2023. This would be a major 50% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Trainline forecast to report a statutory profit of UK£0.023 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£269.8m and earnings per share (EPS) of UK£0.021 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

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It will come as no surprise to learn that the analysts have increased their price target for Trainline 8.8% to UK£3.30on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Trainline at UK£4.55 per share, while the most bearish prices it at UK£1.70. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Trainline is forecast to grow faster in the future than it has in the past, with revenues expected to display 50% annualised growth until the end of 2023. If achieved, this would be a much better result than the 8.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually. So it looks like Trainline is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Trainline's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Trainline analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Trainline that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.