AAR's (AIR) distribution business "remains a positive" due to its "strong" relationships with original equipment manufacturers, RBC Capital Markets said in a note Tuesday.
The brokerage noted that market share gains in OEM distribution and robust underlying demand in commercial and government markets drove new parts distribution revenue growth for the aviation services provider in fiscal Q1.
RBC also said that it continues to be cautious on used serviceable material availability due to tight supply chains that might ultimately narrow the company's USM margin spread.
The firm said that AAR's fiscal Q1 results, which beat consensus, "surprised to the upside" driven by better-than-expected revenue growth.
RBC maintained an outperform rating on the stock with an $85 price target.
AAR shares were up over 4% in recent trading.
Price: 82.14, Change: +3.79, Percent Change: +4.84