12:35 PM EDT, 09/24/2024 (MT Newswires) -- AAR's (AIR) outlook for fiscal Q2 could prove to be conservative as demand for new parts and maintenance, repair and overhaul services shows strength, RBC Capital Markets said in note emailed Tuesday.

Used serviceable materials segment has shown weakness, but that will be offset by the management's execution and cost management in the MRO business, and upside from recent acquisitions, coupled with demand for new parts.

"The company is guiding to [nearly 20%] sales growth in [fiscal Q2 2025], and we believe the demand for new parts and MRO services will more than offset the continued pressure in USM sales," RBC said.

The recent P-8 engine contract reinforces the company's strong commitment, and contract like that do leverage its commercial business, RBC said.

RBC maintained its outperform rating for AAR and a price target of $85.

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