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Investing.com - RBC Capital has raised its price target on AAR Corporation (NYSE:AIR) to $90.00 from $85.00 while maintaining an Outperform rating on the stock. The new target represents a potential 9% upside from the current price of $82.51. InvestingPro data shows that analysts broadly share this optimistic outlook, with a strong consensus recommendation of 1.2 (where 1 is Strong Buy).
The price target increase follows AAR’s recent acquisitions of American Distribution (ADI) and HAECO Americas, along with a follow-on equity raise by the company. These strategic moves come as AAR demonstrates solid financial health with a current ratio of 2.91, indicating its liquid assets comfortably exceed short-term obligations - one of several InvestingPro Tips highlighting the company’s position.
According to RBC Capital, the ADI acquisition expands AAR’s Parts Supply and distribution portfolio, while the HAECO Americas business includes five years of long-term contracts valued at approximately $850 million, which will expand AAR’s heavy MRO (Maintenance, Repair, and Overhaul) business.
RBC Capital noted that while these acquisitions may initially be dilutive, the firm believes the long-term opportunity to expand company margins remains intact as AAR delivers on adding scale and limiting its USM exposure.
The price target increase reflects a growing EBITDA base for AAR Corporation following these strategic acquisitions.
In other recent news, AAR Corp . has announced the pricing of its public offering of 3 million shares of common stock at $83 per share, aiming to generate approximately $239 million in net proceeds. This offering includes a 30-day option for underwriters to purchase an additional 450,000 shares, potentially increasing net proceeds to $274.9 million if fully exercised. The company plans to use these funds to repay outstanding borrowings and for general corporate purposes, such as funding future acquisitions. In a significant move, AAR Corp. has also acquired American Distributors Holding Co., LLC (ADI) for $146 million in an all-cash transaction. This acquisition is set to enhance AAR’s parts distribution business by adding new product lines and OEM relationships. Additionally, Malaysia Airlines has entered a multi-year agreement with Airinmar, a subsidiary of AAR Corp., for aircraft warranty management services. This partnership aims to maximize warranty recoveries and reduce component repair costs for the airline. These developments reflect AAR Corp.’s ongoing efforts to expand its market presence and streamline operations.
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