Trainline (LON:TRNT), the online rail-ticketing platform, was downgraded to “underweight” from “neutral” on Wednesday as J.P. Morgan warned that the company faces a weaker operating setup heading into 2026, driven by regulatory intervention, rising competitive pressure and lower earnings expectations.

Shares of the UK-based company were down 6.4% at 04:27 ET (09:27 GMT). 

The brokerage cut its price target to 230p for December 2027 from 300p, placing the valuation below prior assumptions. Trainline’s shares last closed at 227p on Dec. 2.

J.P. Morgan said the government’s decision to freeze regulated rail fares across England for the first time in 30 years will weigh directly on UK Consumer Net Ticket Sales, which the brokerage now expects to be flat in FY27. 

This follows a 4.6% regulated fare increase in March 2025. The analysts said the freeze will limit pricing and revenue growth, with earnings affected by operating deleverage. 

UK Consumer revenue is now projected to fall 2% in FY27, with the group revenue forecast reduced 4% over FY27-28.

The brokerage also cited the government’s plan to create a unified, government-backed digital rail retail platform under Great British Railways. The platform would consolidate 14 operator websites and apps into a single national service.

 J.P. Morgan said the shift is likely to intensify competition for customer acquisition and reshape the digital retail landscape, adding that headline risk from ongoing legislation will continue to pressure the company.

The brokerage lowered its adjusted EBITDA forecast by 8% for FY27-28, with expectations reduced to £177 million in FY27 and £178 million in FY28. 

Adjusted EPS for FY27 was cut to 21.50p, down 12.1% from previous estimates. Group revenue is forecast at £457 million in FY27 and £477 million in FY28, while net ticket sales are expected to reach £6.56 billion in FY27 and £6.87 billion in FY28.

While Trainline continues to generate strong cash flow, including £103 million in FY27 free cash flow, J.P. Morgan said valuation has become less attractive given slower growth. 

On revised estimates, the stock trades at 7.1x EV/EBITDA, aligned with an expected above 4% EBITDA CAGR between FY26 and FY28. 

The brokerage noted that although shareholder returns remain sizeable, including a £150 million share buyback and an estimated £75 million recurring program from FY27, risk-reward has shifted unfavorably.

The analysts also reviewed the impact of artificial intelligence on the business. Trainline has rolled out AI-driven tools such as a travel assistant and used machine-learning systems for customer support and engineering productivity. 

However, J.P. Morgan cautioned that the rise of “agentic AI” platforms could redirect traffic away from Trainline’s direct channels, challenging monetization and increasing the need for investment in technology and marketing.

J.P. Morgan said Trainline now operates within a more regulated and nationalized market framework as more rail operators transition to public ownership, adding to competitive and structural uncertainty.