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What You Need To Know About The Trainline Plc (LON:TRN) Analyst Downgrade Today

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Simply Wall St
·3 min read
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The latest analyst coverage could presage a bad day for Trainline Plc (LON:TRN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At UK£4.93, shares are up 5.3% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the eight analysts covering Trainline provided consensus estimates of UK£64m revenue in 2021, which would reflect a sizeable 61% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching UK£0.17 per share. However, before this estimates update, the consensus had been expecting revenues of UK£71m and UK£0.16 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Trainline

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

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that Trainline'sdecline is expected to accelerate, with revenues forecast to fall 61% next year, topping off a historical decline of 32% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 17% per year. So while a broad number of companies are forecast to grow, unfortunately Trainline is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Trainline's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Trainline after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Trainline's business, like a short cash runway. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

This article by Simply Wall St is general in nature. 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.

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