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On Friday, Truist Securities updated its stance on AAR Corporation (NYSE:AIR), adjusting the price target to $78.00 from the previous $81.00, while reiterating a Buy rating on the company’s stock. According to InvestingPro data, analysts maintain a strong bullish consensus on AIR, with price targets ranging from $75 to $85, suggesting potential upside from current levels. The stock, currently valued at $2.08 billion by market cap, has demonstrated notable volatility in recent trading. The adjustment came after AAR Corporation reported its financial results for the third quarter of fiscal year 2025, which presented a mixed outcome. The company experienced a shortfall in its top-line revenue, attributed to weakness in its USM (Used Serviceable Material) segment. This resulted in revenue figures that fell short of both Wall Street expectations and the company’s own guidance.
Despite the revenue miss, AAR Corporation saw an earnings per share (EPS) beat due to strong profit margins. The management at AAR Corporation has indicated that, as of now, they have not observed nor do they anticipate a decline in demand for their services. InvestingPro analysis shows the company maintains healthy liquidity with a current ratio of 2.68, while delivering impressive revenue growth of 18.53% over the last twelve months. Get access to 7 more exclusive InvestingPro Tips and comprehensive financial metrics by subscribing to InvestingPro. This outlook holds even in the face of recent reductions in airline capacity, weaker ticket sales, and potential impacts from tariffs.
Truist Securities expects AAR Corporation’s revenue in the fourth quarter of fiscal year 2025 to increase at a high single-digit rate, excluding the impact from landing gear sales. Additionally, the firm anticipates that adjusted operating margins will experience modest sequential growth. In their analysis, Truist Securities has taken a conservative approach to their estimates, factoring in the sale of the landing gear business and the current uncertainties in the market, including tariffs and capacity challenges.
The report from Truist Securities reflects their belief that AAR Corporation will continue to perform well financially in the upcoming quarter despite the recent challenges and market uncertainties. The firm’s maintained Buy rating indicates their confidence in the company’s ability to navigate through these headwinds and capitalize on its strong margin performance. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels, though it has demonstrated a strong return over the past five years. Dive deeper into AAR Corporation’s financial health and growth prospects with InvestingPro’s comprehensive research report, available along with 1,400+ other detailed company analyses.
In other recent news, AAR Corp reported its third-quarter financial results for fiscal year 2025, highlighting record sales but mixed outcomes against analyst forecasts. The company achieved an earnings per share of $0.99, slightly surpassing the forecast of $0.98, while revenue fell short, reaching $678 million compared to the expected $698.97 million. Despite the revenue miss, AAR Corp’s sales increased by 20% year-over-year, marking a new third-quarter sales record. The company’s adjusted EBITDA rose by 39% to $81.2 million, with an improved EBITDA margin of 12%. AAR Corp is actively expanding its product distribution and consolidating operations, and it remains optimistic about continued growth through fiscal year 2026. Analysts have noted the company’s strong demand from both commercial and government sectors. Additionally, AAR Corp is focusing on strategic partnerships and product innovations to drive future growth and margin expansion.
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