Alstom: merits better - even without Siemens Mobility (UBS)
(CercleFinance.com) - This morning UBS confirmed its buy rating advice on the share of French rail equipment manufacturer Alstom, even though its merger with the German group Siemens Mobility has been suspended, pending the decision of the European Commission.
The broker has a 12-month target price of 48 euros for the share, which suggests upside potential of 35%.
The European competition regulator has made no secret of its reservations about this merger. Even so, according to UBS, "In the event of a negative EU commission merger outcome, we see limited negative consequences to Alstom's shares". Having fallen back to around 33 euros to 35 euros, the share has indeed returned to a level that is not far from where it was trading before the announcement of the potential merger in September 2017.
However, according to analysts, these price levels underestimate Alstom's fundamentals, including the development of its backlog, which, in the meantime, has increased from 34 billion to 40 billion euros. This also applies to revenues, which have increased from more seven billion to over eight billion euros, with the he nine billion euro mark expected to be surpassed by 2020. The group is also reporting improvements in its operating profitability. Finally, Alstom has significantly improved its cash position, thanks to the payment received from General Electric.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
The broker has a 12-month target price of 48 euros for the share, which suggests upside potential of 35%.
The European competition regulator has made no secret of its reservations about this merger. Even so, according to UBS, "In the event of a negative EU commission merger outcome, we see limited negative consequences to Alstom's shares". Having fallen back to around 33 euros to 35 euros, the share has indeed returned to a level that is not far from where it was trading before the announcement of the potential merger in September 2017.
However, according to analysts, these price levels underestimate Alstom's fundamentals, including the development of its backlog, which, in the meantime, has increased from 34 billion to 40 billion euros. This also applies to revenues, which have increased from more seven billion to over eight billion euros, with the he nine billion euro mark expected to be surpassed by 2020. The group is also reporting improvements in its operating profitability. Finally, Alstom has significantly improved its cash position, thanks to the payment received from General Electric.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.