On Monday, Stifel, a financial services firm, adjusted its price target on shares of AAR Corporation (NYSE:AIR), a provider of aviation services, from $81.00 to $86.00. The firm continues to recommend a Buy rating for the stock. The revision reflects Stifel's outlook for the company's growth potential, particularly in the upcoming fiscal years.
AAR Corporation's stock has experienced fluctuations, trading between $57 and $73 per share in recent months, underperforming compared to its peers in the aerospace aftermarket sector. Stifel attributes this underperformance primarily to challenges in AAR's government business sector, which has impacted the company's overall organic growth. These difficulties are anticipated to persist into the current quarter.
Still, Stifel suggests that the negative impact from the government business is only a temporary setback. The firm anticipates a robust growth trajectory for AAR Corporation in Fiscal Year 2025, possibly extending into Fiscal Year 2026. This optimism is based on the expectation of a prolonged commercial aerospace aftermarket cycle and a projected sequential improvement in the government business.
The analysis by Stifel also points to the slower expansion of AAR's Used Serviceable Material (USM) business, which has been affected by a lower availability of feedstock. Nevertheless, this is seen as a potential tailwind for the company once the delivery of new jets accelerates.
As the fiscal year-end approaches in May 2024 for AAR, Stifel concludes that the company's prospects are more favorable than what the current stock valuation suggests. With this in mind, Stifel has increased its stock price target to $86 while reaffirming its positive stance on the stock with a Buy rating.
InvestingPro Insights
As AAR Corporation (NYSE:AIR) navigates through the challenges in its government business sector, recent data from InvestingPro underscores the company's financial health and market performance.
With a market capitalization of $2.5 billion and a P/E ratio that has adjusted to 30.54 over the last twelve months as of Q3 2024, AAR Corporation is positioned in a competitive market environment. The company's revenue growth of 15.81% during the same period indicates a solid upward trajectory in earnings potential.
InvestingPro Tips highlight that while analysts have revised earnings expectations downwards for the upcoming period, AAR Corporation has demonstrated a strong return over the last month with an 18.74% increase. This suggests that despite near-term headwinds, the stock has been gaining momentum among investors. Moreover, the company's liquid assets surpassing short-term obligations and a moderate level of debt provide a stable financial base for future growth.
For investors looking to dive deeper into AAR Corporation's prospects, there are 11 additional InvestingPro Tips available, which can be accessed with a special offer. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and gain comprehensive insights into AIR's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.