Allison Transmission price target raised to $79 from $74 at BofA

BofA raised the firm’s price target on Allison Transmission (ALSN) to $79 from $74 and keeps an Underperform rating on the shares after Allison announced an agreement to acquire Dana’s (DAN) off-highway business. The deal, which comes at a relative low point in the cycle for off-highway markets, would extend Allison’s reach into construction, forestry, agriculture, and industrial markets among others, while nearly doubling Allison’s potential revenue, the analyst noted. The firm thinks the acquisition comes at “a fair valuation” and marks a turning point in Allison’s capital allocation strategy, but notes that the reaction has been “tepid” and that Allison’s shares have fallen 3% since the deal was announced. BofA senses some market hesitation as Allison acquires a business whose primary products sold have more of an emphasis on “cost-out” vs “pricing,” the analyst added.