Raymond James cuts Bristow Group stock price target on supply delays

Raymond James cut its Bristow Group price target to $63 from $67 but maintained an Outperform rating, citing support for its positive view despite supply-chain delays to Government Services profitability recovery. Bristow missed fiscal Q3 2026 expectations, reporting $0.93 EPS versus $1.17 expected and $437.9 million revenue versus $441.2 million, but reaffirmed its 2026 adjusted EBITDA midpoint of about $310 million, roughly 25% above the prior year. Raymond James cited Offshore Energy growth, the Bristow Special Missions contribution, and gradual Search & Rescue margin normalization as potential 2027 drivers, with normalization increasingly weighted to the second half of that year.

Analysis

The key issue is conversion, not the 2026 EBITDA headline: supply-chain friction is deferring Government Services recovery while the expected earnings bridge increasingly depends on 2027 Offshore Energy growth, Special Missions contribution and later Search & Rescue normalization. That makes VTOL a timing-sensitive execution story; a maintained midpoint does not by itself establish that cash generation will track EBITDA.

Near term, the earnings miss and delayed margin recovery can cap multiple expansion even if analyst targets imply substantial upside. Over 1–3 months, focus on evidence that aircraft availability penalties and parts constraints are easing, plus cash conversion and any change to the EBITDA midpoint. Over 6–18 months, successful aircraft deployment and contract resets could improve returns, but delays would push out the thesis and leave investors underwriting a longer period of weak Government Services economics. Offshore helicopter operators may also benefit from favorable capacity conditions; additional industry capacity would weaken that pricing support.

Contrarian angle: the target reduction may overemphasize a delayed recovery rather than impaired demand, but consensus targets are not a catalyst. The stock’s discount is only compelling if operational normalization translates into cash. Falsifiers include a cut to the 2026 midpoint, persistent availability penalties, worsening cash generation, or further slippage in the 2027 margin-recovery timeline.

Key Decisions for Investors

• Treat VTOL as a measured, catalyst-dependent long rather than buying solely against analyst targets. Consider initiating only after confirming the EBITDA midpoint remains intact and operating constraints show sequential improvement; size for further execution delays.
• For the next earnings update, track Government Services aircraft availability penalties and parts-related disruption, cash generation relative to adjusted EBITDA, and the timing of Search & Rescue margin normalization. A midpoint reduction or deteriorating cash conversion invalidates the constructive case.
• Avoid an aggressive near-term options position: the central catalyst is operational improvement over coming quarters, while the timing is uncertain and the headline guidance is already maintained. Reassess once management provides verifiable progress on aircraft deployment and 2027 earnings contributions.