Allison Transmission price target lowered to $105 by Raymond James

Investing.com - Raymond (NSE:RYMD) James lowered its price target on Allison Transmission (NYSE:ALSN) to $105.00 from $110.00 on Monday, while maintaining an Outperform rating on the stock. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 10.07, suggesting potential upside from current levels.

The firm cited a more difficult outlook for Allison’s North American on-highway customers in recent months, though it believes the current stock multiple adequately reflects potential cuts to the company’s full-year guidance.

Raymond James remains optimistic about Allison’s margin durability, highlighting the company’s solid price capture as a differentiating factor among truck suppliers. The firm noted that Allison’s current valuation multiple underappreciates the quality of its franchise, which averages approximately 60% return on tangible capital.

The research firm also pointed to consistent cash generation as a positive factor for Allison Transmission. Additionally, Raymond James observed that electric vehicle adoption faces a longer and more difficult path in most segments of the commercial vehicle space.

This slower EV adoption trend has become more apparent, especially following the recent EPA review of EPA27 and GHG-3 regulations, which Raymond James believes presents upside potential to its target multiple for Allison Transmission stock.

In other recent news, Allison Transmission has announced a definitive agreement to acquire Dana Incorporated’s off-highway business for approximately $2.7 billion. The acquisition, pending regulatory approvals, is expected to close in late 2025 and is projected to be immediately beneficial to Allison’s earnings per share, with anticipated annual synergies of about $120 million. This move aims to expand Allison’s global reach in powertrain and drivetrain solutions. Additionally, BofA Securities raised its price target for Allison Transmission to $79, citing the acquisition’s potential to nearly double the company’s revenue. In another development, Allison secured an order for its 3040 MX transmissions for Poland’s Borsuk Infantry Fighting Vehicle program, following a Memorandum of Understanding with Grupa Zbrojeniowa. Furthermore, the Maryland Department of Transportation has selected New Flyer buses equipped with Allison’s eGen Flex (NASDAQ:FLEX) hybrid propulsion system for its Baltimore operations, which promises improved fuel economy. These developments highlight Allison Transmission’s ongoing strategic initiatives and expansion efforts.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.