(Boursier.com) — Alstom actually leaves the CAC40 this Monday. A departure far from weighing on the title at the start of the session since the railway group’s action climbed 8.7% to 13.4 euros. It must be said that Deutsche Bank has raised its recommendation on the issue to ‘buy’, estimating that “the worst is now behind the group”. Management will provide more details in May on its debt reduction program, which could create a ‘short squeeze’ while the stock is one of the most sold in Europe, says the broker.
The dilution resulting from a possible capital increase and the risks of executing the project are now well understood, with the stock down 54% year-on-year and trading at a discount of around 40 to 50% compared to peers. With the stabilization of WCR indicators, the broker sees significant upside potential both on margins and on FCF given: the gradual decrease in historical loss-making projects (+100 basis points); the growing share of contracts with indexation clauses in the order book (+50 basis points); targeted synergies (+150bps); and reduction in S&A costs (+100bps). For every 50 basis points of margin improvement, Alstom’s FCF would increase by €90 million to €100 million.
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