Share of AAR Corp. (NYSE: AIR) reached an all-time high yesterday. But after the company reported somewhat soft results in the early evening, the stock fell.

AAR reported quarterly revenue of $449.7 million, in line with The Street’s expectation, but earnings per share was a little light. Adjusted EPS was $0.35, a bit below consensus expectation for $0.365.

The company’s Aviation Services segment continues to do well. Segment revenue grew to $391.6 million, up 13% compared on a year-over-year basis. The segment gross profit margin improved to 17%. Sales to commercial customers grew by 20% and AAR won several new contracts during the quarter. These include two long-term deals with Air Canada and a four-year deal with Republic Airline.

The other segment, Expeditionary Services, was the laggard. The segment revenue fell 24.6% to $58.1 million. Demand from government for support of troop movements continues to be soft. AAR indicated on the conference call that it is strategically shifting focus to go after more government-owned, government operated businesses rather than company-owned, company-operated projects. That type of projects is lower cost and thus offer higher margins.

AAR has started work on its contract with the Bureau of International Narcotics and Law Enforcement Affairs (INL). This deal was heavily contested by a rival, but a federal court upheld the agreement, clearing the legal uncertainty and allowing AAR to immediately begin work.

This contract carries options that could extend the term to as long as eleven years and the potential work could be worth as much as $10 billion. So this is a huge contract that could alter the numbers in the Expeditionary Services segment by a lot in the years to come. AAR has declined so far to comment on the near-term financial impact of this development because it’s too early. It should have more details on Investor Day, scheduled for January 11.

The company also gave preliminary guidance on how the recently passed tax-code change will impact its bottom line. It expects a positive EPS impact of between $0.35 and $0.45 per share in fiscal 2019 (starts on June 1, 2018).

AIR has performed nicely since joining our portfolio in February. Even after the roughly 7% fall today, it’s still up about 20% since joining Brain Trust Profits. We had AIR rated as a “hold” with a suggested buy-up-to price of $40 as we felt the share price had gotten a bit ahead of itself. Thus, none of our readers should have purchased any shares above the $40 mark. In the latest reported quarter, reference fund Marcato Capital Management had added more AIR shares to its already large position, so there’s no reason to overreact to one bad day.

The company still looks well positioned. The stock price drop is more of a correction in reaction to quarterly results not matching high expectations. We were anticipating a correction. Now that it has happened, we will reevaluate and may even lift the limit price in the next week or two. For now, we leave it at $40.

Jazz Pharmaceuticals (NASDAQ: JAZZ) announced today that it has submitted an application to the FDA for its JZP-110 drug for treatment of excessive sleepiness in adult patients with narcolepsy or obstructive sleep apnea. The drug demonstrated a good safety profile and high efficacy in trials and has an orphan drug designation for narcolepsy.

The FDA normally responds within ten months, so a decision is expected in the second half of next year. Assuming approval, the drug will offer revenue diversification from Xyrem, which still lies under some threat of generic competition. Early estimates call for about $300 million in peak annual sales for JZP-110.