Alstom: Order inflow set to improve after weak Q1; FY guidance reiterated

Research evidence excerpt

Alstom: Order inflow set to improve after weak Q1; FY guidance reiterated

Akash Gupta AC Europe Equity Research

(44-20) 7742-7978 22 July 2026 J P M O R G A N

akash.z.gupta@jpmorgan.com

Investment Thesis, Valuation and Risks

Alstom Valuation(Overweight; Price Target: €28.00)

Investment Thesis

• Backlog provides growth visibility: Driven by a >€100bn backlog, Alstom has good

visibility on revenue growth in the coming years. Rail is a growing market in which we

expect a high level of activity, also supported by government stimulus.

• Self-help and operational excellence to drive margin uplift: Replacing loss-making

BT contracts with profitable ones, growth in volumes and a change in mix towards

higher margin services are key drivers of margin improvement.

• Cash flow inflection to start in H2: A key bear point of the Alstom story was its weak

balance sheet, which was addressed through a €2bn debt-reduction plan in 2024. As

headwinds from restructuring, integration and provisions ease, we expect H2’FY27 to

see a significant inflection in cash flow.

Valuation

Our Dec 2027 price target is based on a reverse DCF valuation. The 12-month forward target

multiple is 9x EV/adj. EBIT, applied to our calendarised 2028 forecasts. The multiple takes

into account the through-cycle growth, margins, cost of capital and asset intensity. We adjust

our EV to reflect the negative contract working capital.

Risks to Rating and Price Target

We see the following downside risks:1) Project execution issues impacting margins. 2)

Delays to orders that could bring downside to our estimates. 3) If cash conversion of Alstom

disappoints, it would bring downside to our forecasts and will drive a de-rating of shares.

4) Supply chain headwinds driving downside to future earnings and cash flow. 5) Further