Alstom shares soar on strong orders

PARIS, Jan 20 (AFP) – Shares in engineering group Alstom soared by 10 percent Tuesday after Deutsche Bank brokers upgraded their recommendation to “buy” from “sell” and investors belatedly noticed strong recent order figures.

The market appeared relieved by the improved outlook for the company, which nearly collapsed last year and is under a state-supported restructuring.

The price of shares jumped by 10.64 percent to EUR 1.56 here in heavy trading, with about 112 million shares, or 15.3 percent of the group’s capital, changing hands.

The main CAC 40 index was off 0.06 percent at 3,687.85 points.

A Paris-based dealer said the market saw the upgrade as significant because Deutsche Bank analysts had been “very negative” on Alstom and were “the first to say Alstom was not worth more than one euro per share, at a time when the shares were still worth EUR 7 or EUR 8.”

“I think we’re also seeing a delayed effect, because the session yesterday, with the US markets closed, was very quiet, and maybe investors are only reacting today,” on the news of the turbine contract, the dealer said.

Alstom, which builds power generation systems, rolling stock for France’s high-speed TGV trains and cruise liners, notably the new Queen Mary 2, reported Monday that sales and orders had fallen sharply in the first nine months of its financial year.

But analysts highlighted data indicating renewed customer confidence in the group, noting that orders had picked up in the third quarter, and even the nine-month figure was better than they had expected.

And in a separate announcement on Monday, Alstom said it had won a turbine and maintenance contract with a total value of EUR 680 million (USD 851.6 million) from Spain’s Gas Natural SDG at the end of December.

Even so, investors had remained cautious, pushing up the share price by 1.44 percent to EUR 1.41 in heavy trading on Monday that represented 12 percent of the group’s capital.

Galvanizing Tuesday’s trading was the latest Deutsche Bank recommendation, in which analysts upgraded their price target for Alstom shares to EUR 2from EUR 1.1 on the back of the group’s improving order book.

They also lifted their earnings estimates, but left their net debt estimates broadly unchanged.

They said they considered the shares highly speculative but see upside potential.

Subject: France news