Kepler Cheuvreux downgraded Alstom to "reduce" from "hold," slashing its target price to €25 from €27.50. This move reflects persistent execution risks within Alstom's project portfolio and concerns over weak cash performance. The analysts also adjusted their earnings estimates, cutting adjusted EBIT and EPS forecasts by 11% to 18%, citing the company's financial profile.

The downgrade follows a reassessment of Alstom's financial health. Despite record order intake, management didn't alter its second-half free cash flow guidance, suggesting lower pre-payment levels. Kepler Cheuvreux also pointed to pressures from early-stage rolling stock projects and underutilized capacity in certain countries, impacting margin recovery.

Alstom's rail markets, though stable in volume, face intense competition. Project complexity further limits industrialization benefits. The brokerage believes Alstom shares trade above their fair value, no longer presenting an attractive risk-reward profile. Investors should watch for the next earnings report to gauge the impact of these challenges.

This downgrade is a blow to Alstom, a major player in the global rail industry. The company is navigating a complex operational environment. The analysts have adjusted their definition of adjusted EBIT to exclude joint ventures and associates and amended financing charges. This move casts doubt on the company's future.