Ahead Of The Bell: AAR Upgraded By Jesup & Lamont

NEW YORK (AP) — A surprisingly strong earnings report by AAR Corp., which was able to minimize damage from inventory destocking, led an analyst Wednesday to upgrade the shares to "Hold" from "Sell."

The aviation product supplier's fiscal first-quarter profit shrank by nearly a third as commercial airlines cut back on inventory levels and maintenance visits — but results still beat Wall Street expectations.

Jesup & Lamont analyst Alex P. Hamilton said AAR's executives responded well to the inventory destocking, selling an aircraft as well as combining their sales and leasing business with their supply chain business.

Meanwhile, Stifel Nicolaus analyst Troy Lahr reiterated his "Buy" rating but cut his earnings estimate for fiscal 2010 by 8 cents to $1.62. Analysts polled by Thomson Reuters expect, on average, $1.51.

"AAR is still facing a challenging commercial environment as airlines pull capacity and continue inventory destocking," Lahr said. "We also expect pricing pressures to continue through the end of the year."

In premarket trading, the Wood Dale, Ill., company's shares rose 57 cents, or 3 percent, to $19.56.