(Reuters) – Alstom shares regained color on Friday on the Paris Stock Exchange after dropping up to 2.62% at the opening, penalized by the reduction in recommendation from JP Morgan which evoked doubts as to the capacity of the railway manufacturer to generate cash.

At 09:31 GMT, Alstom gained 0.73% to 11.72 euros, while the CAC 40 was up 0.8% at the same time.

On Friday, JP Morgan lowered its recommendation on the stock from “overweight” to “neutral”, and reduced its price target by 20%, to 14.4 euros.

Alstom’s financing plan, which plans to raise 2 billion euros through asset sales and a potential capital increase, adds to the uncertainty, explains the bank, which emphasizes that the company will need time to regain investor confidence.

“While we still appreciate the visibility of backlog-related earnings, the debate now turns to liquidity and earnings quality, concerns that will remain salient until the operating cycle shows sustained improvement,” explains JP Morgan.

The bank is concerned about Alstom’s future orders, with the group’s management having said that inflation and rising rates were pushing customers to delay their decisions.

High order-to-bill ratios at rivals Siemens and Stadler show Alstom’s market share is at risk, JP Morgan adds.

The bank also lowered its recommendation from “neutral” to “underweight” for Stadler Rail, rating orders at an all-time high and citing high risks to the margin outlook.

Alstom’s valuation remains “attractive” for the broker, which expects it to post good profit growth over the next two years, replacing loss-making Bombardier Transportation contracts with more profitable projects.

Alstom shares have lost almost half their value this year.

(Written by Olivier Sorgho, Corentin Chappron, edited by Kate Entringer)

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