Alstom shares posted one of the strongest gains on the SBF 120 index on Friday on the Paris Stock Exchange after Citi raised its recommendation, expressing optimism about the French rail equipment manufacturer's cash flow performance.

The broker upgraded the stock from "neutral" to "buy" with a target price raised from €21 to €31.

At around 5:15 p.m., the mobility specialist's stock was up more than 4%, while the SBF index was broadly unchanged.

In a research note, Citi estimates that the group should have reached a low point in terms of cash generation in the first half of the 2025/2026 financial year, before a gradual improvement in the following years.

The broker adds that the factors that have weighed on cash flow to date—namely, the ramp-up of projects, orders focused on rolling stock, and the recognition of provisions—should gradually ease, allowing for a marked recovery starting in 2027.

The factors that have weighed on cash flow—project ramp-up, order book composition focused on rolling stock, and provision releases—should gradually ease, allowing for a marked recovery starting in fiscal year 2027, he adds.

According to its forecasts, free cash flow should exceed €700 million in 2027, representing more than €500 million distributable to shareholders.

Improved margins, linked to the conversion of a more profitable order book, and the stabilization of working capital requirements could then bring this flow to more than €1 billion per year by 2030, the professional continues.

Given the ongoing debate surrounding the company's value, the broker says it has opted for a direct equity valuation approach using a discounted cash flow model, a method that leads it to set a target price of €31, justifying an upgrade of its recommendation to buy.