Freedom Broker raises Allison Transmission stock price target on strong Q3 results

Freedom Broker has increased its price target on Allison Transmission shares (NYSE:ALSN) to $147 from $144, maintaining a Buy rating following strong third-quarter results. The company's revenue, EBITDA, and earnings per share exceeded expectations, primarily driven by the legacy Transmission business. Sales in North American medium-duty and vocational segments were record-breaking, supported by healthy pricing and growth across all end markets.

This performance has yielded a 44% return over the past year, and InvestingPro analysis indicates the stock is undervalued compared to its Fair Value, trading at a P/E ratio of 16.92. However, margins were less impressive as the Off-Highway business, with lower margins, diluted the revenue mix and material costs offset some of the gains from volume and price.

Most profit growth came from effective cost control rather than gross margin expansion. The Off-Highway segment, typically in its weakest season, grew modestly, with construction and mining activities offsetting softer agriculture and industrial demand. Integration efforts are progressing, with European restructuring underway and expected synergies to start appearing in earnings next year.

Management has raised full-year guidance for the second quarter in a row, modestly increasing revenue and earnings per share forecasts while adopting a slightly more cautious stance on margins. For a comprehensive view of ALSN's valuation and growth potential, investors can access the detailed Pro Research Report. Allison Transmission reported impressive third-quarter 2026 results, surpassing Wall Street expectations with adjusted earnings of $2.90 per share and revenue of $1.53 billion, exceeding previous forecasts.

The company also raised its full-year guidance for net sales, adjusted EBITDA, and cash flow, attributing the revenue increase to the acquisition of Allison Off-Highway and strong demand in core markets.