(News Bulletin 247) – The railway equipment manufacturer is at the top of the CAC 40 on Monday and has recovered more than 10% over all three sessions, driven by positive analyst ratings on its course.

Clearly the management of Alstom has found the words to reassure the market about its prospects. The railway equipment manufacturer delivered its annual results last Wednesday for the 2022-2023 financial year ended last March and postponed its operating margin target of between 8% and 10%, now expected for the financial year. 2025-2026.

In the process, the group held a “capital market day”, a day dedicated to investors. Then, since Wednesday, Alstom has been organizing “roadshows”, events where a company meets investors and analysts. About fifteen will take place by the end of the month, in Europe and the United States.

And it must be recognized that its meetings seem to be fruitful for the time being, the action starting in the right direction. Past the disappointment of Wednesday, where the title had lost 2.4%, the value is now in the process of chaining three sessions clearly in the green. This Monday, Alstom still signs the largest increase in the CAC 40 (+5.4% around 3 p.m.) after gaining 2.3% on Friday and 3.6% on Thursday. In total, the recovery of the title exceeds 11%.

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A degradation of Moody’s that does not panic

“The rebound of the last sessions on Alstom is the consequence of the exaggeration of the fears of the market and the fall of the title during the publication of the annual results which had not really reserved any unpleasant surprises. Even the one-year lag of the operating margin target had been partly integrated, since the consensus was for a margin of less than 8% for the 2024-2025 financial year”, underlines Jean-Louis Sempé, independent financial analyst.

Design offices also carry the title, with comments and positive opinions this Monday. JPMorgan confirmed its advice to “overweight” and raised its price target to 34 euros against 33 euros. Quoted by the agency Agefi-Dow Jones, the bank believes that fears about Alstom’s balance sheet should fade after the publication of its results, due in particular to the generation of cash, which is expected “significantly positive” by the group for the current fiscal year.

Cash generation focuses the attention of the market, Alstom being a group indebted to the tune of just over 2 billion euros. The company has also made defending its investment grade credit rating a top priority. However, with the downgrading of the group’s rating by one notch to “Baa3” last week by Moody’s, the company is theoretically on a crest line, the “Baa3” rating representing the last investment grade rating of the company. ‘rating agency.

However, JPMorgan notes that the “stable” outlook associated with this rating excludes immediate risks.

An impressive order pool

An observation shared by Oddo BHF. “We believe that the downgrade (the lowering of the note, editor’s note) of Moody’s to Baa3, with a stable outlook, has the merit of removing uncertainties (with target ratios for the current year)”, writes the office of studies in a note published on Monday.

Oddo BHF observes that the stock is traded on rolling 12-month valuation multiples that are 25% lower than their historical average. This while Alstom presents, according to the design office, one of the strongest growth potentials in adjusted operating profit in its sector, with an average annual increase of 24% expected by 2025 while benefiting from “dynamic demand”. .

On this point, Oddo BHF, which confirmed its recommendation as “outperformance” as well as its target price of 32.1 euros, points out that Alstom has identified 120 billion euros in order opportunities (nearly 1.5 times its order book at the end of March) for the next 18 months. This should allow the group to be “selective” in its contracting. Consequently, Deutsche Bank, which also published a note on the group on Monday, considers that Alstom benefits, in view of these numerous commercial opportunities, from significant leeway to increase its margins, by focusing on contracts the most profitable.

In addition, Oddo BHF estimates that the company’s cash generation should be robust for this 2023-2024 financial year ending next March, expecting 311 million euros, an increase of more than 50% compared to the 199 million 2022-2023.

More broadly, according to the consensus of the Investing.com site, 12 of the 19 analysts following the action recommend it for purchase, and their average price target, close to 30 euros, gives a potential of nearly 16% to the stock.

Alstom is a value on which analysts have often been positive, due to its many attractions (strong demand for rail, sector linked to sustainable mobility, increase in margins in the medium term). But this optimism has often been sorely tested due, for a time, to disappointments due to the painful integration of the Canadian Bombardier Transport, but also to a certain mistrust of the market. The stock was thus the target of short sellers. In a ranking carried out at the end of 2022 by S&P Global Market Intelligence at the request of News Bulletin 247, Alstom ranked first among the most “shorted” SBF 120 securities, ahead of Orpea.