Deutsche Bank Starts Allison Transmission (ALSN) at Hold
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Deutsche Bank initiates coverage on Allison Transmission (NYSE: ALSN) with a Hold rating and a price target of $30.
Analyst Nicole DeBlase said, "ALSN sells fully automatic transmissions into the NAFTA medium-duty and straight truck markets (39% of company sales), and uniquely has no exposure to the Class 8 tractor market. This has been a massive positive YTD, and is expected to remain the case in 2017e – we forecast ALSN’s NA On-Highway sales down 9% and 1% Y/Y in 2016e and 2017e, respectively, vs. ACT’s forecast for a 34% and 29% respective Y/Y decline in NA tractor production. However, the Class 8 tractor market is very cyclical, and is slated for a significant (+31% Y/Y) rebound in 2018e – in this environment, investors are likely to shift exposure from ALSN to more NAFTA Class 8-focused names."
Shares of Allison Transmission closed at $27.83 yesterday.
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