JPMorgan and Citi no longer recommend shares of train manufacturer Alstom. Why?
Alstom has lowered its full-year forecast due to technical problems with certain train models / www.alstom.com
Shares of French train manufacturer Alstom fell nearly 5% on November 3 during trading in Paris. Analysts at JPMorgan and Citi downgraded their recommendations on the company’s stock and no longer recommend buying it. The day before, on November 2, Alstom sharply lowered its annual forecast due to problems with train production and certification, after which its shares plummeted by a quarter.
Details
Alstom shares fell 4.8% to €11.13 on November 3 on the Euronext exchange in Paris. During trading on Wednesday, November 4, the stock price continued to decline slightly.
Alstom shares are also traded in the U.S. on the over-the-counter (OTC) market. On November 3, its shares fell 5.9% to $12.6, while its American Depositary Receipts (10 ARDs equal 1 share) fell 6.35% to $1.18.
Shares fell after analysts at JPMorgan and Citi downgraded the train manufacturer’s stock rating following the company’s own downward revision of its forecasts, according to the Seeking Alpha website. JPMorgan lowered its recommendation from “Overweight” to “Neutral,” while Citi lowered its recommendation from “Buy” to “Neutral/High Risk.”
The revision of forecasts is due to technical and production issues with certain models, including the high-capacity Coradia Max trains, Alstom announced on November 2, when it released preliminary unaudited results for the first half of fiscal year 2026–2027 (which ended in September).
As a result, the company will produce approximately 4,000 railcars by the end of the fiscal year, compared to the previously planned 4,400–4,500. Organic revenue will grow by a low to mid-single-digit percentage, compared to the approximately 5% previously forecast. Free cash flow is expected to be negative €1.5 billion, whereas a positive figure had previously been forecast. The forecast for the adjusted operating margin has been lowered to approximately 1% from 6.5%.
On November 2, the day these results were released, Alstom's stock plummeted 25% on the Paris stock exchange. The stock lost roughly the same percentage in the U.S.
What about the targets?
As the rating was downgraded, investment banks lowered their price targets for the train manufacturer's shares.
For example, Citi cut its price target in half—to €14 (with upside potential of nearly 26%)—stating that the company’s information “raises as many questions as it answers,” according to Seeking Alpha.
JPMorgan lowered its price target by 44% to €15.6 (40% upside potential from the last closing price), citing a decline in projected earnings and a lower valuation multiple.
According to JPMorgan’s estimates, project-related issues reduced Alstom’s adjusted operating profit for the first half of the year by approximately €1 billion. The scale of the downward revision came as a surprise to the bank: a year earlier, the similar negative impact amounted to about €190 million. JPMorgan also expects the recovery in free cash flow to be delayed by at least 12 months—due to ongoing problems with the implementation of its plans.
Analysts have generally adopted a wait-and-see stance: Alstom shares have 11 “hold” recommendations, three “buy” recommendations, and three “sell” recommendations. Since the beginning of the year, the stock has fallen by approximately 56% in Paris.
