AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp displays a strong positive outlook due to gradual improvements in margins and significant growth in its Parts Supply segment, which recorded a 17% increase in fiscal Q4 2025 driven by strong distribution performance. The company is poised for continued growth as it converts its TRAX sales model and benefits from approximately $850 million in customer contracts over the next five years, translating to an estimated $170 million in annual revenue. The favorable market conditions in commercial aviation, coupled with AAR's strategic positioning within the heavy MRO and parts sectors, suggest that the company is well-equipped to capture additional market share moving forward.

AAR Corp is expected to trade at a discount compared to its peers in the commercial aerospace and maintenance, repair, and overhaul (MRO) sector due to lower profit margins and investor skepticism regarding the attractiveness of the commercial MRO business relative to other segments. The company's government-related operations are perceived as a headwind for market sentiment, and past challenges in managing costs and margins have continued to undermine its financial performance. Furthermore, the competitive landscape remains challenging, with expectations that larger players in the market could further exacerbate AAR's difficulties despite ongoing management efforts to improve execution.