Allison Transmission Performing In Top Gear Despite Bumpy Road Ahead

CLSA initiated coverage on Allison Transmission Holding Inc ALSN with an Outperform Rating and $31 target price.

Allison is a " op-quality company facing choppy end market," according to analyst Kristine Kubacki. Monitoring end market inventory levels, Kubacki claimed that medium-duty and Class 8 straight truck inventories became elevated from product launches early in the year, but should correct in the next several quarters.

"More than offsetting any negative factors," said Kubacki, "we see new market opportunities, further margin expansion and an Free Cash Flow yield in excess of 10% as key positives in the ALSN story."