FTSE 250 shares round-up: Trainline, Deliveroo and Volution
There’s a big winner among this trio following its latest update on trading, but the other two have had another stinker. City writer Graeme Evans describes the action.
13th March 2025 13:27
by Graeme Evans from interactive investor
The de-rating of Trainline (LSE:TRN) and Deliveroo (LSE:ROO) continued today after their setting of new trading landmarks failed to prevent shares dipping to the cheapest levels of the past year.
The FTSE 250-listed travel app reported record ticket sales for the third year in a row, while it grew revenue for the 12 months to 28 February by an underlying 12%.
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Deliveroo posted its first-ever bottom-line profit of £2.9 million in relation to 2024 trading, and said it expected to grow adjusted earnings to between £170 million and £190 million this year. The figure for last year rose 52% to £129.6 million in today’s annual results.
Having traded strongly during 2024, the difficult start to 2025 continued for the shares of both companies, as Trainline reversed 35.8p to a 15-month low of 278p and Deliveroo unwound 7.8p to return to where it was a year ago at 116.8p.
The slide for Trainline on the back of its year-end update reflected net ticket sales of £5.9 billion and revenues of £442 million that were slightly short of City expectations.
The misses were driven by international consumer ticket sales, which at £1.1 billion were short of hopes due to industry-wide changes to the presentation of Google’s search engine results. Demand from US tourists also levelled off following its post-Covid surge.
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The latest bout of selling means shares are already down by a third this year, reflecting jitters after the government said last month it is considering plans for a single public sector rail app.
Trainline said today it will continue to invest for growth in the UK - including increasingly leveraging generative AI to further enhance the customer experience.
It pointed out that it already thrives in a competitive environment in the UK and that Great British Rail’s retailing will likely take several years to crystallise.
Chief executive Jody Ford added: “There is still so much to be achieved in the UK and Europe with the critical foundation being open, fair and competitive markets. Rail is set to surge across Europe and Trainline will be at the centre of it.”
In light of the recent share price weakness and unchanged guidance in today’s update, broker Peel Hunt reiterated its 460p target price and Buy rating.
It said: “Today's performance, coupled with another buyback, does not justify its derating to less than seven times forecast 2026 earnings. However, Google risks persist and the UK government is considering a single public sector retail app.”
Competition heating up
Deliveroo shares were above 140p as recently as last month, boosted by the possibility of further industry consolidation after Just Eat Takeaway.com NV (EURONEXT:TKWY) backed a takeover by a Dutch technology investment group in a deal worth about £3.4 billion.
The latest reverse from the two-year high of 160p seen in September was caused by disappointment over guidance for the new financial year, reflecting the impact of targeted investment as Deliveroo looks to “capture future growth opportunities”.
The City had been looking for an underlying earnings figure of £190 million, even before factoring in a £10 million boost from the recent closure of Hong Kong operations.
Panmure Liberum, which has a price target of 200p, said the business is in good health after noting a return to growth in average order frequency and UK monthly active consumers.
However, it shares the company’s caution in terms of the earnings outlook. The broker added: “We had earlier cut our 2025 estimates to reflect a more difficult market and consumer backdrop for 2025, with competition heating up and, in the UK, National Insurance changes likely to stimulate price action by restaurants and therefore lower order volumes.”
Walking on air
The best performance in the FTSE 250 index was by ventilation products firm Volution Group (LSE:FAN), which jumped 65p to 584p after its interim results included an uplift to full-year guidance.
Adjusted profits rose 10.4% to £38.6 million, with good organic growth supplemented by the first two months of trading by its largest ever acquisition, Fantech.
Analysts at Jefferies said: “As has very much become customary with Volution over recent reporting periods, this is another beat-and-raise half.
“What is particularly pleasing to see is the acceleration in organic revenue growth. This has gone from 2.5% at the four-month AGM period to 4% for the half-year, implying that in the final two months of the period, organic revenue growth was above 6% and therefore above the 3%-5% target range.”
The bank has a price target of 690p, while Peel Hunt raised its position from 600p to 625p.
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