Alstom Shares Drop 27% in a Week, Hitting a Critical Oversold Threshold
Alstom continues its decline this Friday, April 24, dropping 2.55% to €16.61 during the session, after a bleak week with a retreat of over 27%. The railway specialist's stock has suffered since the announcement of mixed annual results, where record orders failed to mask a decline in profitability. Meanwhile, the CAC 40 dropped 1.05% during the session, in a tense market environment.
Origins of Alstom's Sharp Correction
The severe correction that Alstom is undergoing originates from the April 22 announcement of its results for the fiscal year ended March 31. While commercial activity reached an unprecedented level with €27.6 billion in order bookings, up 39%, and an order book now exceeding €100 billion, operational profitability disappointed. The adjusted operating margin came in around 6%, down from 6.4% a year earlier, hampered by slower-than-expected ramp-ups in several rolling stock programs. This gap between commercial dynamics and industrial execution fueled a rapid loss of confidence: over three months, the stock has lost nearly 38%. The day before, Barclays lowered its price target from €11.50 to €10, significantly below the current price, illustrating the persistent skepticism of some analysts regarding the group's ability to improve its margins in the short term. The next key date is set for May 13, when detailed annual results for 2025/2026 will be published.
Technical Analysis of Alstom's Situation
From a technical analysis perspective, Alstom's situation reflects the magnitude of the correction. The stock is now trading below all of its moving averages: the 50-day moving average is at €24.68 and the 200-day moving average is at €23.23, both significant deviations from the current price of €16.61. This massive disconnection from medium and long-term trends indicates a decidedly bearish dynamic. The RSI, an indicator measuring the speed and intensity of a movement, stands at 26, below the conventional threshold of 30 that defines an oversold zone. This signal is consistent with the stock's position in the Bollinger Bands: at €16.61, the stock is approaching the lower boundary set at €15.86, which corresponds to the bottom of the band and confirms a potential oversold situation. The nearest technical support threshold is at €16.64, a level almost reached this morning. A clear breach of this floor could pave the way for a new level of decline, in an environment where monthly volatility remains high at 14.56%.
