AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp is projected to experience a significant increase in its fiscal year 2027 earnings per share (EPS), estimated at $5.56, alongside an anticipated revenue growth to $3.6 billion, driven by favorable market conditions and new contract wins. The company has demonstrated strong performance with a 36% organic growth in new parts distribution during fiscal 3Q26, particularly benefiting from increased demand in government maintenance, repair, and operations (MRO) services. With expectations of an ongoing recovery in the commercial aviation sector and improved adjusted operating margins ranging from 10.2-10.5%, AAR Corp is well-positioned for positive growth in the coming quarters.

AAR Corp has successfully reduced its net leverage to approximately 2.2x, within its targeted range; however, it is projected to continue trading at a discount compared to its commercial aftermarket peers due to consistently lower margins. Investor sentiment is negatively impacted by the perception that the commercial MRO business holds less attractiveness relative to other segments, alongside ongoing challenges within its government business unit. Furthermore, AAR faces substantial competition from larger companies, and while management is focusing on execution and cost management, historical margin pressures remain significant challenges for the company.