AAR (AIR) remains "well positioned" to benefit from higher aftermarket parts demand, but more material margin expansion and free cash flow improvement will be important for a further step-change in its multiple, RBC Capital Markets said in a Thursday note.
Noting AAR's fiscal Q4 results, RBC said the 17% growth in the parts supply business was the highlight, with AAR seeing over 20% growth in its distribution business.
AAR reported fiscal 2025 free cash flow of about $1 million, and RBC said that while it would like to see FCF improve, it "appreciates" the continued working capital investments.
The firm maintained its outperform rating and raised its price target to $85 from $75.
Price: 83.99, Change: +9.11, Percent Change: +12.17
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