AAR Corp. heads into its May 12 quarterly report with short sellers cutting positions, options traders leaning bullish, and analysts raising targets — a broadly constructive backdrop despite a tough week for the stock.
The price action tells a split story. AIR fell 6.6% on the week to close at $108.86, unwinding some of March's sharp post-earnings rally. The one-month picture is flatter, up just 1.5%, suggesting the weekly dip is consolidation rather than trend. The stock's RSI sits at 42.7 — not oversold, but softening. Among close peers, VSEC fell harder, down 9.4% on the week, while GE and DCO both gained modestly, pointing to some stock-specific pressure on AIR rather than a sector-wide selloff.
Short sellers, by contrast, have been heading for the exit. SI dropped 11.4% over the week to 2.78% of the free float — modest in absolute terms, but the direction is clear and consistent. The retreat has been running since late March, when shorts had pushed to just over 1.3 million shares. They've trimmed roughly 150,000 shares since then. Cost to borrow has also eased sharply — down 32% over the past month to just 0.35% annualised, about as cheap as borrow gets for a name this size. Borrow availability is loose, with utilisation running near 5%, less than half its 52-week high of 9.2%. None of this looks like a market preparing for a squeeze or a surge in new short conviction. The ORTEX short score has drifted lower all month, now at 34.2 — well below the midpoint — reinforcing the picture of fading short-side interest.
Options positioning backs the same read. The put/call ratio is running at 0.51, more than a full standard deviation below its 20-day average of 0.61. That's a noticeably call-skewed setup, putting it closer to the 52-week low of 0.27 than the high of 1.03. Options traders are not hedging aggressively ahead of earnings — if anything, they're positioned for upside.
The Street has been consistently bullish since AAR's fiscal Q3 print in late March, which drove a 14.5% single-day jump. Keybanc lifted its target from $120 to $132 on April 9, maintaining Overweight — the most recent action, and the only one inside the 14-day window. Earlier in the cycle, Jefferies pushed its target to $150 and RBC raised to $125, both maintaining positive ratings. Goldman Sachs initiated at Neutral with a $121 target in January, providing the sole note of caution. The mean price target has settled around $131 — roughly 20% above the current price — and return potential registers at 18.9%. The bull case centres on 36% organic growth in parts distribution and strong government MRO demand. Bears point to structurally lower margins relative to pure-play commercial aftermarket peers and ongoing competitive pressure in the MRO space. The PE stands at 21.2x, EV/EBITDA at 12.6x — both have compressed modestly over the past week, reflecting the pullback. EPS surprise ranks in the 87th percentile, and 90-day EPS momentum is in the 67th — the company has consistently beaten estimates.
The insider log is worth noting. CEO John Holmes sold roughly $9 million of stock in a cluster of transactions on March 26–27, at prices around $107–$112. The CFO and Chief Administration Officer also sold in the same window. The trades came in the immediate aftermath of that 14.5% earnings surge, which moves them closer to the category of routine post-print monetisation than a negative signal — but the concentration and scale warrant attention. Net insider sales in the 90-day window total approximately $23.5 million. BlackRock and Vanguard both added materially in Q1, reporting a combined increase of roughly 870,000 shares, which provides institutional support against the insider selling backdrop.
The next focal point is the May 12 earnings call. The setup before the last print — on March 24 — was broadly similar: modest short interest, low borrow costs, and call-skewed options. The result was a 14.5% single-day rally. Before that, a December print produced a 5.2% decline. With shorts retreating, options skewing bullish, and analysts carrying elevated targets, the positioning into May 12 will be worth watching alongside any update on government MRO contract momentum.
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