On Wednesday, Baird adjusted its outlook on Allison Transmission (NYSE:ALSN), a prominent manufacturer of automatic transmissions for commercial vehicles. The firm increased its price target on the company's stock to $108.00, up from the previous $103.00. Despite the raise, the analyst maintained a Neutral rating on the shares.
The upgrade comes after Allison Transmission reported third-quarter results for 2024, which surpassed Baird's high expectations. The company's management also expressed confidence, observing no signs of a slowdown in Class 8 vocational demand. They further indicated a favorable position for long-term agreement (LTA) pricing gains in the North American On-Highway segment for the upcoming year.
The analyst from Baird highlighted the company's robust near-term fundamentals and expressed a more positive disposition following the quarterly performance. The firm suggested that the recent gains in the stock's value are likely to persist, supported by Allison Transmission's strong business model, effective execution, and the ongoing anticipation around commercial vehicle electrification, which is expected to extend into the future.
Allison Transmission's stock has shown significant outperformance year to date (YTD), and Baird's analysis implies that any potential market weakness could be an opportunity, given the company's solid performance and prospects.
The analyst's comments underscore the belief that Allison Transmission is well-positioned to benefit from industry trends, despite the Neutral stance, which typically suggests that the stock should perform in line with the expectations for the overall market or sector.
In other recent news, Allison Transmission has seen its stock target raised by both Citi and Baird, due to strong sales and anticipated revenue growth. Citi raised its price target from $97.00 to $109.00, citing an increase in Allison Transmission's adjusted EBITDA forecast due to stronger than expected North American on-highway revenue.
Baird also increased the stock price target to $103 from the previous $90, recognizing the company's significant performance surge following the second quarter of 2024 results.
Allison Transmission has also announced a strategic partnership with LiuGong, a global construction equipment manufacturer, to address the needs of the Indonesian mining industry. This collaboration was highlighted by the unveiling of LiuGong's 70-ton DW105A Wide Body Dump Truck, equipped with Allison's 4800 Wide Body Dump Series transmission.
Another development includes a successful trial of a Hyundai (OTC:HYMTF) Xcient hydrogen fuel cell truck, equipped with an Allison 4000 Series™ fully automatic transmission, which completed 30,000 kilometers of deliveries for GLS Germany. This marks a significant step in the company's efforts to explore environmentally friendly propulsion technologies.
Lastly, Allison Transmission declared a quarterly cash dividend of $0.25 per share for the third quarter of 2024. This follows the company's impressive second-quarter 2024 results, where it reported a record-breaking revenue of $816 million, driven by strong demand across various sectors.
InvestingPro Insights
Allison Transmission's strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's impressive gross profit margin of 48.17% for the last twelve months as of Q2 2024 aligns with the InvestingPro Tip noting "impressive gross profit margins." This robust profitability underscores the company's operational efficiency, which likely contributed to its ability to surpass Baird's high expectations in the recent quarterly results.
Additionally, the stock's YTD price total return of 73.88% and its current trading at 98.77% of its 52-week high reflect the significant outperformance mentioned in the article. This is further supported by the InvestingPro Tip indicating a "high return over the last year" and that the stock is "trading near 52-week high."
For investors seeking a deeper understanding of Allison Transmission's financial health and market position, InvestingPro offers 13 additional tips, providing a comprehensive analysis to inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.