AAR's (AIR) fiscal Q2 results exceeded expectations and will support confidence for H2 and the broader aerospace and defense market, RBC Capital Markets said in a note emailed Wednesday.
The parts supply segment was a key growth driver boosted by distribution to US Military, and continued growth in the sector is expected to lead to stronger margins in the fiscal H2, according to the note.
The brokerage is slightly conservative on fiscal 2026 margin outlook, however, margin growth is expected due to synergies from third-party services, expansion in heavy maintenance, repair and overhaul, and continued benefits from the parts supply segment.
"We are more conservative on Integrated System and Repair and Engineering fiscal year 2026 margins relative to our prior estimates," RBC added.
The brokerage maintained an outperform rating for AAR and a $75 price target.
Price: 66.97, Change: +5.22, Percent Change: +8.45
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