JPMorgan, Citi cut train maker Alstom to 'hold' and slash TPs on production woes

Shares of French train maker Alstom fell around 5% in Paris on Tuesday after JPMorgan and Citi downgraded the stock from "buy" and lowered their target prices. A day earlier, Alstom’s management sharply cut its full-year guidance because of problems with train production and certification, sending the shares down by a quarter.

Alstom shares fell 4.8% to EUR11.13 apiece on Euronext Paris on Tuesday. The stock edged lower again on Wednesday. Alstom also trades over the counter in the U.S. Its ordinary shares fell 5.9% to $12.60 apiece on Tuesday, while its American depositary receipts fell 6.35% to $1.18 apiece. Ten receipts represent one ordinary share.

The losses came after JPMorgan and Citi downgraded the train maker in the wake of the guidance cut, Seeking Alpha reported. JPMorgan lowered its rating to “neutral” from “overweight,” while Citi cut its recommendation to “neutral/high risk” from “buy.”

The revised outlook reflects technical and production problems with some models, including the high-capacity Coradia Max trains, Alstom stated Monday as it released preliminary unaudited results for the first half of its fiscal 2026-2027, which ended in September.

The management now expects to produce around 4,000 railcars for the fiscal year, versus 4,400-4,500 previously, and forecasts low- to mid-single-digit organic revenue growth, versus around 5% previously. It expects a free cash outflow of EUR1.5 billion, having previously forecast positive free cash flow, and lowered its adjusted operating margin forecast to around 1% from 6.5%.

Alstom shares plunged 25% in Paris on Monday after the results came out. The stock fell by around the same amount in the U.S.

Both investment banks lowered their target prices for the train maker’s stock alongside the downgrades. Citi halved its TP to EUR14 per share, implying around 26% upside, saying the company’s update “leaves as many questions as answers,” Seeking Alpha reported. Meanwhile, JPMorgan cut its TP by 44% to EUR15.60 per share, implying 40% upside from the last close, citing lower earnings estimates and a lower valuation multiple.

JPMorgan estimates that project issues reduced Alstom’s first-half adjusted operating profit by around EUR1 billion. The scale of the hit surprised the bank, given a similar impact of around EUR190 million in the second half of the previous fiscal year. JPMorgan also expects ongoing project execution problems to delay a recovery in free cash flow by at least 12 months.

Analysts are mostly on the sidelines. Alstom has 11 “hold” ratings, three “buy” or “overweight” calls, and three “sell” or “underweight” recommendations, according to MarketWatch data. The stock is down around 56% year to date in Paris.