(Reuters) – Alstom shares climb on the Paris Stock Exchange on Monday after an increase in recommendation from Deutsche Bank, whose analysts believe that “the worst is over” now for the heavily indebted railway equipment group.

At 09:30 GMT, Alstom gained 9.95% to 13.53 euros while the SBF 120 increased at the same time by 8.7%.

Deutsche Bank raised its recommendation on the stock to “buy” from “hold” and left its price target unchanged at 17 euros.

Alstom, which left the CAC 40 this Monday, has been the subject of concerns from investors over its debt for several months.

Last November, the group said it was considering a capital increase, job cuts and asset sales, as part of a series of efforts aimed at reducing its net debt by two billion euros. here March 2025.

According to Deutsche Bank analysts, the capital increase could be limited to 500 million euros.

“The dilution resulting from a possible capital increase and the risks linked to the execution of the project are now well understood”, they added while the Alstom stock showed a decline of almost 50% over one year at the close on Friday. .

Alstom must present its detailed debt reduction plan in May, which is likely to cause a “short squeeze” on the stock which is among one of the most short-sold in Europe, warn Deutsche Bank analysts.

A “short squeeze” is a forced liquidation of short positions when a stock rises sharply, which is likely to further fuel this movement.

Deutsche Bank analysts note several other catalysts for the stock, including the gradual reduction of loss-making projects, the increase in the share of contracts with indexation clauses in the order book, targeted synergies and cost reductions.

(Written by Nathan Vifflin, edited by Blandine Hénault)

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