On Wednesday, CFRA analyst Alan Lim Seong Chun upgraded Alstom (EPA:ALSO) SA’s stock rating from ’Buy’ to ’Strong Buy’ and raised the price target to EUR24.00 from EUR22.00. The new target is based on a forward price-to-earnings (P/E) ratio of 19.8 times, which is one standard deviation above the five-year average valuation for the fiscal year ending March 2026. The analyst cited Alstom’s improved business quality and a de-risked profile as reasons for the premium valuation.
Alstom reported robust financial results for fiscal year 2025, surpassing consensus estimates. The company achieved sales of EUR18.49 billion, marking a 4.9% year-over-year increase. Adjusted earnings before interest and taxes (EBIT) reached EUR1.18 billion, and free cash flow (FCF) was a strong EUR502 million, significantly exceeding the expected figures of EUR18.31 billion in sales, EUR1.16 billion in adjusted EBIT, and EUR330 million in FCF.
The company’s order intake for the year was EUR19.85 billion, a 4.7% increase from the previous year. This growth was primarily driven by significant European contracts, such as the EUR3.6 billion S-Bahn Rheinland deal in Germany. The positive book-to-bill ratio of 1.1 underscores the company’s healthy order pipeline. Notably, Alstom’s FCF showed a remarkable improvement, turning positive at EUR502 million, compared to the prior year’s negative EUR557 million.
Looking forward, management has provided an optimistic outlook for fiscal year 2026. Alstom projects organic sales growth of 3%-5% and an adjusted EBIT margin of approximately 7%, with FCF expected to be in the range of EUR200 million to EUR400 million. Based on these projections, CFRA has increased its fiscal year 2026 earnings per share (EPS) estimate for Alstom to EUR1.21 from EUR1.12 and has initiated a fiscal year 2027 EPS forecast at EUR1.44.
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