ALSN: Consistent Execution Will Support Margin Strength Despite Medium-Duty Truck Weakness

Analysts have slightly lowered their price target for Allison Transmission Holdings from $101.89 to $100.20. They cite consistent business performance while anticipating softer long-term demand in the medium-duty truck segment.

Analyst Commentary

• Value-based pricing strategies are seen as a positive driver for Allison Transmission's ability to maintain margins and support steady financial performance.
• Consistent improvement in the core transmission business reflects effective execution and operational discipline, contributing to the company's resilience in changing market conditions.
• The current valuation incorporates the benefit of operational stability and a proven track record of navigating industry cycles.
• Analysts appreciate the company's focus on its strengths, particularly within its established product lines, to generate sustainable cash flow.

• Concerns remain about a muted long-term demand outlook for the medium-duty truck segment, which could limit revenue growth over time.
• The lack of significant exposure to higher growth adjacencies or transformative innovation may dampen future expansion potential.
• Some analysts are taking a neutral stance because the current market environment offers fewer catalysts for substantial share price appreciation.

What's in the News

• North American Class 8 truck orders decreased 32% year-over-year in September. However, orders reached their highest monthly total in eight months (Bloomberg).
• Allison Transmission revised its 2025 full-year earnings guidance and now expects net sales between $2,975 and $3,025 million and net income of $620 to $650 million.
• The company completed a share repurchase tranche, buying back 306,476 shares for $27 million between July and September 2025. The company has now repurchased 72.65% of shares authorized since 2016.
• The global network of authorized service providers for Allison’s cross-drive defense transmissions has expanded. Wojskowe Zaklady Motoryzacyjne (WZM) in Poland has joined as a new channel partner.
• Allison’s 4500 Rugged Duty Series transmission has been successfully integrated with the Cummins X15N natural gas engine in Kenworth T880 tractors, marking progress in sustainable heavy-duty transportation.

Valuation Changes

• The consensus analyst price target has declined slightly from $101.89 to $100.20 per share.
• The discount rate has risen modestly from 9.02% to 9.23%.
• The revenue growth projection has decreased slightly from 21.28% to 21.23%.
• The net profit margin estimate has edged down from 18.66% to 18.63%.
• The future P/E ratio forecast has increased from 9.43x to 9.74x.