Zacks Investment Research downgraded shares of AAR Corp. (AIR) from OUTPERFORM to NEUTRAL on April 08, 2013, with a target price of $18.00.
We are downgrading our recommendation on AAR Corp. to Neutral from Outperform following its fiscal third quarter of 2013 results. Although its earnings came above our expectation, earnings decreased from the year-ago quarter. Revenues in its technology products segment declined 30% and segment gross margin also saw a considerable drop from the year-ago quarter. Again, risks like stiff competition, margin pressures on account of delayed aircraft availability, unscheduled maintenance inspections and high fuel prices, and inadequate debt financing, unfavorable aircraft lease agreement and currency fluctuations are also causes of concern. We are nevertheless confident of the company's ability to achieve its increased earnings expectation based on its strong operational efficiency, enhanced product availability and constant efforts of rewarding shareholders through dividend payments and share buybacks.
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