Expectations, mine and the Street’s, were already calling for a cyclical downturn for Allison Transmission (ALSN)
in 2020, as the company was going to see weaker heavy and medium-duty
demand and substantially weaker demand in end-markets like energy and
mining. Now with the Covid-19 outbreak leading to manufacturing
shutdowns and widespread curtailment in economic activity, what was
already going to be a tough year is now looking like a really
challenging one.
Allison hasn’t sold off as badly as
some of its vehicle supplier peers; a fact I attribute at least partly
to the company’s stronger margins. I expect Allison to be back on track
by 2022/2023, and while the valuation isn’t as compelling as it is for
other suppliers, particularly with a 30%-plus recovery from the recent
lows, investors who had been waiting for a chance to buy in at a better
price still have that opportunity.
Read more here:
Covid-19 Shifts Allison Transmission's Cyclical Downturn To A New Gear
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