Goldman Sachs has opened coverage on AAR Corporation (NYSE: AIR) with a Neutral recommendation and set a price target of $121, a level the firm says implies roughly 15% upside from the stock's then-current price of $105.66 on Monday.
In its research note, Goldman Sachs described AAR as a "diversified aerospace aftermarket company" that conducts airframe MRO, performs component repairs, distributes original-equipment (OE) and used-serviceable material (USM) parts, and offers other aerospace supply-chain services. The bank highlighted that certain businesses within AAR have delivered "above-market organic growth" and pointed to margin improvements in recent years, a dynamic consistent with AAR's reported revenue growth of 15.4% over the last twelve months.
Despite these positive elements, Goldman Sachs underscored limits to the company's overall performance. The research team wrote that the company's "total company growth and profitability remain below our aerospace supplier average, and the company does not generate meaningful amounts of free cash." Supporting that view, InvestingPro data cited by the report shows negative levered free cash flow of -$33.2 million in the most recent reporting period.
Goldman Sachs concluded that AAR's current valuation "fairly captures these dynamics," and that assessment informed its Neutral rating. Complementary InvestingPro metrics referenced in the coverage show a price-to-earnings ratio of 41.32 and indicate the shares are trading near their 52-week high after roughly a 50% gain over the past year, with InvestingPro's Fair Value model flagging the stock as fairly valued.
Recent operational results and analyst responses
Market attention on AAR has also followed the company's fiscal second-quarter 2026 results. AAR reported earnings per share of $1.18, beating KeyBanc's estimate of $1.02 and the consensus estimate of $1.03. The company delivered total sales growth of 16% for the period, with 12% attributed to organic growth.
Those results prompted several firms to adjust their views. RBC Capital raised its price target to $105 from $90 while keeping an Outperform rating. Truist Securities lifted its target to $99 from $90, citing performance driven by organic strength and recent acquisitions. KeyBanc increased its target to $109 from $93, noting confidence in the company's execution and growth strategy. Jefferies reiterated a Buy recommendation and highlighted the extension of a longstanding contract with Air Atlanta Icelandic for AAR's Trax software platform.
Together, the mix of Goldman Sachs' Neutral rating and the follow-on analyst reactions reflect a market balancing AAR's clear operational momentum against valuation and cash-generation concerns.
Conclusion
Goldman Sachs' initiation frames AAR as a company with demonstrable revenue growth and improving margins in parts of its business, yet constrained by overall profitability and the absence of meaningful free cash flow. The firm's $121 target and Neutral stance are positioned against a backdrop of rising share prices and differing analyst price-target revisions following recent quarterly results.