AAR's (AIR) confidence in the near-term outlook appears more "bullish than expected," with the company's management seeing no meaningful risks from the ongoing Middle East conflict, RBC Capital Markets said in a Wednesday note.

The company does not expect the ongoing airline capacity adjustments to the conflict to have meaningful impact on aftermarket demand, RBC said, adding that risks will appear if higher crude prices lead to lower travel demand.

The company's fiscal 2026 guidance implies an increase in fiscal Q4 organic growth to about 7% from the 5% to 6% range, according to RBC. Noting the company's better-than-expected fiscal Q3 results, RBC said the 36% organic growth in new parts from the distribution segment was a highlight.

RBC raised its price target to $125 from $105 on AAR and maintained its outperform rating.

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