Alstom shares rallied on the Paris Bourse on Friday, after dropping as much as 2.62% at the opening, penalized by JP Morgan's downgrade of its recommendation, citing doubts about the rail manufacturer's ability to generate cash.

At 09:31 GMT, Alstom was up 0.73% at 11.72 euros, while the CAC 40 was up 0.8% at the same time.

On Friday, JP Morgan lowered its recommendation on the stock from "overweight" to "neutral", and reduced its target price by 20%, to 14.4 euros.

Alstom's financing plan, which calls for raising 2 billion euros through asset sales and a potential capital increase, adds to the uncertainty, explains the bank, which stresses that the company will need time to regain investor confidence.

"While we still like the visibility of backlog earnings, the debate now revolves around liquidity and earnings quality, concerns that will remain salient until the operating cycle shows sustainable improvement," JP Morgan explains.

The bank is concerned about Alstom's future orders, as the group's management has stated that inflation and rising rates are causing customers to delay their decisions.

The high order-to-bill ratios of rivals Siemens and Stadler show that Alstom's market share is at risk, JP Morgan adds.

The bank also downgraded its recommendation for Stadler Rail from "neutral" to "underweight", judging orders to be at an all-time high and citing high risks to margin prospects.

Alstom's valuation remains "attractive", according to the broker, who expects it to post good earnings growth over the next two years, as it replaces loss-making Bombardier Transportation contracts with more profitable projects.

Alstom shares have lost almost half their value this year. (Written by Olivier Sorgho, edited by Kate Entringer)