Allison Transm Receives a Buy from Oppenheimer

By Jason Carr

Oppenheimer analyst Ian Zaffino reiterated a Buy rating on Allison Transm (NYSE: ALSN) yesterday and set a price target of $46. The company’s shares closed yesterday at $37.80.

Zaffino wrote:

“ALSN reported strong 2Q17 results driven by better than expected demand for North America service parts and North America On-Highway products. Adjusted EBITDA of $225M was above our/Street’s $182.2M/$184.7M projections. 2Q17 revenue of $580M was also above our/Street’s $515.3M/$514M estimates. Given the outperformance in the quarter coupled with a positive market outlook, management has updated its FY17 expectations. Management now anticipates FY2017 net sales to increase 15%-17% YoY (previously 7.5%-10.5%) with an adjusted EBITDA margin of 35.5%-36.5% (previously 34%-36%). ALSN also increased adjusted FCF to $485M- $505M (previously $415M-$455M). With the strong outlook, we raise our 2017E EBITDA to $769M from $705M.”

According to, Zaffino is a 4-star analyst with an average return of 3.9% and a 56.5% success rate. Zaffino covers the Services sector, focusing on stocks such as Houghton Mifflin, Versum Materials, and Brink’s Company.

Allison Transm has an analyst consensus of Moderate Buy, with a price target consensus of $41.

Based on Allison Transm’s latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $499 million and quarterly net profit of $83 million. In comparison, last year the company earned revenue of $475 million and had a net profit of $60.8 million.

Based on the recent corporate insider activity of 60 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ALSN in relation to earlier this year. Last month, Francis Raborn, a Director at ALSN bought 127,322 shares for a total of $1,074,598.

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Allison Transmission Holdings, Inc. engages in the designing and manufacturing of transmissions for commercial and tactical vehicles, as well as hybrid-propulsion systems for transit buses, through its subsidiaries. It operates through a single segment, Manufacture and Distribution of Fully-Automatic Transmissions.