Citi starts bullish Trustpilot coverage on AI-driven review demand

Investing.com -- Citi Research initiated coverage of Trustpilot Group PLC (LON: TRST) with a “buy” rating and a £3.75 price target, citing the online review platform’s growing role in AI-generated brand recommendations and scope for stronger operating leverage.

Citi said Trustpilot accounts for about 45% of review-site citations across major large language model platforms, citing a March 2026 study by SEER Interactive that analysed 804,491 AI responses to U.S. brand recommendation queries.

The brokerage said its valuation is based on a discounted cash flow model using a 9.5% weighted average cost of capital and 3% terminal growth rate, implying a FY27 enterprise-value-to-adjusted EBITDA multiple of 28 times.

Citi forecasts a 42% compound annual growth rate in adjusted EPS between FY26 and FY30, while arguing that consensus estimates underestimate Trustpilot’s operating leverage.

Consensus assumes revenue-to-adjusted EBITDA drop-through will fall to 25% in FY26, from 33% in FY25 and 29% in the first half, Citi said. It forecasts FY26 drop-through of 30%, leaving its FY27 adjusted EBITDA estimate 5% above consensus.

Citi forecasts revenue of $313.6 million in FY26, $364.5 million in FY27 and $424 million in FY28, with adjusted EBITDA margins reaching 25% in FY28, in line with management’s target.

The brokerage identified North America as Trustpilot’s biggest long-term growth opportunity, with market penetration below 1%, compared with 6.8% in the UK. North America currently accounts for about 21% of group annual recurring revenue.

The number of North American customers spending more than $20,000 a year has grown at a 48% compound annual rate since FY22, compared with 36% for the group, Citi said.

Trustpilot shares fell about 19% after its Sept. 15 first-half results, as investors had expected an upgrade to guidance, Citi said. Management reiterated its forecast for high-teens constant-currency revenue growth and a 2-3 percentage point improvement in FY26 adjusted EBITDA margin.

First-half adjusted EBITDA rose 46% to $26.3 million, but was 3% below company consensus of $27 million due to a non-recurring AGCM fine and a U.S. sales tax provision, Citi said.

Citi identified risks including a loss of trust in the platform, weaker-than-expected North American expansion and lower-than-expected margin delivery. It also highlighted the 30% share-price drop on Dec. 4, 2025, following allegations by Grizzly Research of widespread review manipulation at Trustpilot.

Trustpilot removed 7.8 million fake reviews in 2025, while about 3% of profiles are paid, Citi said.

Citi’s bull-case valuation is £5 per share, while its bear case is £2.00. Trustpilot has a market capitalisation of about £796 million.

Original Article

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