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Alstom shares gain on good progress on orders for H1

Published 10/04/2024, 09:10 AM
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Investing.com -- Alstom (EPA:ALSO) shares rose on Friday, buoyed by strong progress in order intake for the first half of the year. 

At 9:10 am (1310 GMT), Alstom was trading 4.9% higher at €19.54.

This uptick in investor sentiment aligns with increasing optimism that the company’s consistent execution of its three-year plan will support a sustained re-rating of its stock. 

A key catalyst for the stock move is the company’s strong order flow, which is an encouraging sign of demand in key segments. 

Despite broader market concerns earlier this week around potential impacts from higher French corporate tax rates, analysts at Citi Research suggest that Alstom is relatively insulated from such pressures. 

While France represents a major portion of Alstom’s overall sales, the company’s taxable profit exposure in the country is notably lower. 

This is due to the fact that French revenues are skewed towards lower-margin rolling stock, as opposed to the higher-margin services that Alstom provides in other regions.

Citi analysts have noted that the contribution of France to Alstom's pre-tax profit is likely well below 10% of the group's total. 

This revenue mix, combined with the company's global diversification and its higher-margin activities outside of France, positions Alstom to better weather the potential challenges posed by increased domestic tax rates.

“We have updated our model to reflect order intake announcements and other adjustments including currency, and remain Buyers ahead of H1 results in November,” the analysts said. 

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