ALSN - Citi opens Positive Catalyst Watch on Allison Transmission

2023-04-21 11:05:53 ET

Allison Transmission Holdings ( NYSE: ALSN ) was placed on Positive Catalyst watch at Citi on Friday as the bank’s analysts see upside to Q1 estimates.

“We are raising our estimates largely to reflect a higher NA on highway and parts/support equipment revenue outlook, which should drive a mix benefit for ALSN,” the team explained. “We expect U.S. non-res construction spending to be solid through 2024, which should help contribute to some level of decoupling between straight trucks and tractors. The upper end of the Class 5-7 truck category is outperforming partly on account of OEM prioritization, which should accrue to ALSN’s advantage in the near-term.”

While the team maintained a Neutral rating on the name, a near term trade looks positive in the analysts’ view.

“We see upside to nearterm estimates on better mix and pricing, which does not seem to be embedded in buyside expectations given the stock’s discounted valuation,” the team conclude. “We are Neutral on the stock given concerns around longer-term margin trajectory but see near-term upside on positive estimate revisions.”

Read more on the earnings expectations for the company next week .

For further details see: