Raymond James keeps ‘Outperform’ rating on Bristow

Investment banking firm Raymond James has kept its ‘Outperform’ rating on operator Bristow. But it has cut its price target to $63/share from $67, with analyst Savanthi Syth arguing that supply chain problems are delaying the recovery in the company’s Government Services business.

The rating followed the company’s third-quarter results. Revenue during the quarter was $438m, an increase of 6.4% on the $412m achieved in the second quarter. Of the absolute $26.2m increase, the biggest single driver was Berry Aviation, now Bristow Special Mission (BSM), acquired by the Bristow Group on July 13th.

Raymond James’ target rests on a multiple of 6.5 times estimated 2027 enterprise value to adjusted EBITDA. This is against Bristow’s last two-year average of 6.8 times.

The broker highlighted near-term earnings volatility, limited trading liquidity, ownership concentration and no major catalyst before the 2027 guidance. “While the delay is disappointing, the long duration of SAR contracts supports the opportunity to recapture attractive margins,” Syth said.

The operator’s adjusted EBITDA during the third quarter at $89.6m was close to Raymond James’ $90.5m forecast. Offshore Energy Services beat, with adjusted operating income of $69m against a $65m forecast, while Government Services fell well short.

Bristow also cut its 2026 Government Services adjusted operating income guidance to $35-$45m from $55-$65m.

The delay in aircraft modifications for new search and rescue contracts, which Bristow anticipates will be substantially complete by the end of the first quarter of 2027, remains the key drag on the margins. Syth anticipates a further three to six months after that before posting a margin recovery.

Syth sees three key drivers, including offshore growth, a full year of the BSM acquisition flowing in to the company and a gradual normalisation of the search and rescue margins. A planned Norway divestiture is an uncertainty, though she expects a smaller hit to earnings than to revenue. She called Bristow “a well-managed business with attractive earnings and FCF [free cash flow] growth prospects.”