Keeping an eye on broker price targets for FTSE 100 and FTSE 250 stocks can be worthwhile. They don’t always end up accurate, of course, and analysts can be like stock market weathermen, forever adjusting their forecasts as share prices get blown this way and that.
Still, they give a quick snapshot of sentiment. Stocks that are trading at or above analysts’ targets suggest both the City and market are in agreement. Whereas one trading far beneath its consensus target may suggest it’s underappreciated, and worth digging into.
Here are two FTSE 250 stocks that recently attracted bullish broker updates, and are currently trading well below their consensus 12-month price estimates.
Trainline
Travel ticket booker Trainline (LSE:TRN) got a Buy rating earlier this month from UBS. The bank reiterated its 465p price target — 59% above the stock’s current level.
Trainline’s down 32% year to date, which reflects concerns about a new potential competitor in the shape of a train ticket booking system under Great British Railways. This has the potential to affect Trainline’s model, which has thrived on the complexity and fragmentation of the UK’s rail network.
We don’t know how this will play out. But Trainline also has a presence in Europe, particularly Spain and France, where ticket bookings have been growing strongly.
Meanwhile, it has a business-to-business Solutions unit that provides ticketing technology to rail operators and other firms. Solutions is the higher-margin division and provides the lion’s share of profits.
Analysts don’t see much top-line growth over the next couple of years. But a 42% rise in earnings per share is forecast this financial year, followed by another 10% increase next year. This puts the stock on a reasonable forward price-to-earnings (P/E) ratio of 12.
Oxford Nanopore
Another mid-cap stock getting favourable institutional attention is Oxford Nanopore Technologies (LSE:ONT). It recently attracted an Outperform rating from RBC Capital Markets, with a new higher price target of 280p, up from 250p.
This is 65% above the current share price, which is up 32% year to date, even after falling 20% in the past month.
Oxford Nanopore makes innovative DNA and RNA sequencing devices. In the first half, revenue rose 28% at constant currency to £105.6m, ahead of expectations. There was broad-based growth across all geographies, including the key US market (+17%).
I like the firm and its ongoing growth story. However, the main problem I have is that Oxford Nanopore’s still loss-making after almost four years of being public. It reported a loss of £71.8 in the first half, only slightly less than the year before (£74.7m).
Looking ahead however, the firm’s still on track to reach adjusted EBITDA breakeven in FY27, and be cash flow positive by FY28. If it can achieve that, and then start delivering real profitable growth, the stock should do very well.
But there are ‘ifs’ here, which add risk, while the firm’s also searching for a new CEO. Co-founder Gordon Sanghera will step down by the end of 2026, after more than 20 years in the role.
Which do I prefer?
Personally, I’m not looking to buy either stock. But Trainline might be one for investors to check out. It’s already profitable and appears to be undervalued, notwithstanding the risks around rail nationalisation.
