AAR Corporation (AIR)

Zacks

AAR Corporation (AIR) reported a solid fiscal first quarter 2013 results with earnings per share of $0.45 surpassing the year-ago earnings by 10% and in line with the high-end of management's guidance range. Revenue jumped 13% on the back of strong commercial aviation services business.

Based on strong sales growth, operational efficiency, enhanced product availability and increased management's FY13 earnings guidance, we upgrade our recommendation on AAR Corp. from Neutral to Outperform. We believe that the company has a competitive advantage over its peers based on its market expertise and technical/financial capabilities.

The company's strategic contract wins hold future potential. Our $19.00 target price, 10.8x 2013 EPS, reflects this view.

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