Baird has raised the price target for Allison Transmission (NYSE: ALSN) shares to $90 from $87, while keeping a Neutral rating on the stock.
The adjustment, which came on Friday, follows Allison Transmission's robust second-quarter 2024 results, which surpassed expectations and led to an increased full-year guidance, aligning with Baird's predictions.
The company's performance was particularly bolstered by strong North American On-Highway sales, driven by notable Class 8 vocational vehicle demand. During the earnings call, management expressed a positive outlook for the third quarter of 2024, suggesting continued momentum for the company.
The analyst from Baird noted that the favorable results could provide near-term trading benefits for Allison Transmission's stock, as it may outperform the second half of the year's expectations.
Despite the optimistic near-term outlook, Baird is taking a cautious approach to Allison Transmission's long-term prospects. The firm is looking to better understand the risks and rewards for the year 2025, considering the cyclical nature of the industry, before projecting further potential gains for the stock.
InvestingPro Insights
Following Baird's price target update for Allison Transmission (NYSE: ALSN), InvestingPro data and tips provide additional insights into the company's financial health and market performance. With a market capitalization of $7.38 billion and a strong gross profit margin of 48.26% over the last twelve months as of Q1 2024, Allison Transmission stands out in its sector. The company's robust financials are also reflected in its impressive P/E ratio, which stands at a modest 10.69, indicating that the stock may be trading at a low price relative to near-term earnings growth.
The company's commitment to shareholder returns is evident as it has raised its dividend for 4 consecutive years, with a dividend growth of 8.7% in the last twelve months as of Q1 2024. Additionally, Allison Transmission's stock has experienced a large price uptick over the last six months, with a 41.01% price total return, and is currently trading near its 52-week high, at 98.09% of the peak value.
Investors seeking further insights can explore additional InvestingPro Tips for Allison Transmission. With 15 more tips available, including the company's low price volatility and moderate level of debt, InvestingPro offers a comprehensive view of the stock's potential. To access these tips and more, visit https://www.investing.com/pro/ALSN and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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