Allison Transmission (ALSN) PT Raised to $79 at BofA Securities

BofA Securities analyst Sherif El-Sabbahy raised the price target on Allison Transmission (NYSE: ALSN) to $79.00 (from $74.00) while maintaining a Underperform rating.

The analyst comments "On June 11th, Allison announced an agreement to acquire Dana’s (DAN) off-highway business. Upon completion, the deal would extend Allison’s reach into construction, forestry, agriculture, and Industrial markets among others, while nearly doubling Allison’s potential revenue. The deal comes at a (relative) low point in the cycle for off-highway markets. What sticks out to us? i) We think the acquisition comes at a fair valuation (compared to similar acquisitions in the space), ii) Allison is looking to diversify cyclicality away from the NA truck cycle, iii) the deal marks a turning point in Allison’s capital allocation strategy, and iv) it mixes margins down ~800 bps with synergies."

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