Broker tips: Synthomer, Trainline
By Iain Gilbert
Date: Wednesday 07 May 2025
(Sharecast News) - Analysts at Berenberg lowered their target price on chemicals Synthomer from 150.0p to 120.0p on Wednesday, stating the group was not yet divested of balance-sheet problems.
Berenberg said Synthomer had experienced "a tough few weeks" until its Q1 update on 1 May, with concerns regarding the impact of a trade war being followed by a mid-April credit-rating downgrade by Moody's and a selloff in its 2029 bonds.
"The trading update - in which cost savings and mix appear to have driven a yoy improvement in group EBITDA despite a softer volume performance in its coatings business - has since stabilised the shares, at least temporarily," said Berenberg, which has a 'hold' rating on the stock.
The German bank stated long-awaited divestment of its UK inorganic chemicals business William Blythe to private equity firm H2 Partners and its management team for £30.0m should allow for "modest de-levering" year-on-year in 2025.
However, Berenberg cautioned that trade headwinds meant that further divestments "appear unlikely" in the next two to three months and said consensus underlying earnings estimates were "still a touch high" for its tastes.
Trainline's share price was in reverse on Wednesday after final results from the ticketing platform failed to reassure investors, though broker Shore Capital chose to stick with its positive rating on the stock.
Full-year results were solid and projections for the current financial year ending February 2026 were ahead of previous guidance, but sentiment appears to have been dampened by potential risks to demand.
The company cited "headwinds" in the current year, such as the planned expansion of the TfL contactless travel zone, while analysts highlighted potential competition from the government's planned launch of a rival ticket retailer, Great British Railways.
Nevertheless, Shore Capital reiterated a 'buy' rating on the stock, with the shares trading at a multiple of 7x on an EV/EBITDA basis and 15x on a price-to-earnings ratio. The broker also said at the current valuation, the stock "continues to price in bad news", in its view.
"This is despite the group remaining well-positioned to scale alongside the new entrant carrier competition and the B2B opportunity both in the UK and Europe. Additionally, we note the recent EBITDA upgrade cycle and some encouraging regulatory updates supporting the outlook for third-party retailers."
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