Alstom: stock stumbles as Goldman Sachs downgrades

(CercleFinance.com) - Alstom's share price was one of the biggest fallers on the SBF 120 index on Tuesday morning, following a recommendation downgrade by Goldman Sachs.


At around 10:30am, the rail equipment manufacturer's share price was down by around 4.6%, while the SBF index was up by 0.2% at the same time.

In a report on the European industrial sector, Goldman Sachs says that it has switched to 'sell', from a 'neutral' rating before, despite raising its target price from E18 to E18.5.

Analysts at the US investment bank say they are concerned about a less favorable environment in terms of orders than the market might anticipate, leading them to post forecasts 8% and 17% below consensus for 2025/2026 and 2026/2027 respectively.

Even if the Group were to manage to generate organic growth of over 5% over the next three years and a FCF conversion rate of 100% in 2025/2026 - a target well above its historical performance and that of the sector as a whole - the New York-based banking giant says that it sees no significant upside potential at current levels, bearing in mind that the stock jumped over 90% last year.

In addition to a valuation deemed 'unattractive' compared with the rest of the sector, Goldman points out that Alstom is one of the few industrial groups not to offer redistributions to its shareholders, with a return on capital employed (ROIC) amongst the lowest in its sector.


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