Offshore Helicopter Supply Tightness And Government Contracts Will Support Strong Long Term Upside

Catalysts

About Bristow Group

Bristow Group provides helicopter and fixed wing aviation services to offshore energy producers and government search and rescue contracts across multiple regions.

What are the underlying business or industry changes driving this perspective?

• The tight global supply of offshore configured heavy and super medium helicopters, combined with approximately 24 month manufacturing lead times and Bristow's position as the largest operator of key models like the S92, AW189 and AW139, supports pricing power and aircraft utilization, which can support revenue and adjusted operating income.
• Management expects offshore energy services activity to remain supported by deepwater projects that sit high in oil and gas company portfolios, and Bristow is already mobilizing additional AW189 capacity into Brazil, Africa and the Caribbean, which can support segment revenues and margins.
• The Government Services business is moving through a transition phase, with the Irish Coast Guard and UKSAR2G contracts expected to reach full operational run rate and management guiding to nearly double adjusted operating income in 2026, which directly supports consolidated earnings and free cash flow.
• The company has tightened 2025 and 2026 revenue and adjusted EBITDA outlooks, with the 2026 midpoint implying about 27% adjusted EBITDA growth on projected revenues of US$1.6b to US$1.7b and around US$140 million of free cash flow after roughly US$100 million of maintenance and growth CapEx, which can support balance sheet strength and capital allocation flexibility.
• Bristow's early work in advanced air mobility, including real world testing of the all electric Beta CX300 in Norway and partnerships with multiple OEMs, positions the company to participate in potential new aircraft platforms over time, which could add incremental revenue streams and support earnings beyond the current contract base.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Bristow Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Bristow Group's revenue will grow by 7.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 7.5% today to 11.1% in 3 years time.
• The bullish analysts expect earnings to reach $208.6 million (and earnings per share of $6.66) by about July 2029, up from $114.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.8x on those 2029 earnings, up from 11.3x today. This future PE is lower than the current PE for the US Energy Services industry at 27.3x.
• The bullish analysts expect the number of shares outstanding to grow by 2.75% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.46%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Persistent supply chain constraints across both new aircraft production and aftermarket parts could limit helicopter availability, which may cap flying hours, trigger availability penalties on contracts and hold back revenue growth and adjusted operating income.
• The offshore energy services segment is already seeing softer activity and lower utilization in regions like the North Sea, and a reduction in ad hoc work in the U.S. Gulf, which could pressure fleet deployment, weigh on pricing and reduce segment revenues and net margins over time.
• Government Services is still in a transition phase for the Irish Coast Guard and UKSAR2G contracts, with higher personnel, subcontractor and professional services costs during ramp up. If these contracts take longer than expected to reach steady state, this could delay the improvement in segment profitability and keep consolidated earnings below expectations.
• Bristow is committing around US$100 million of CapEx in 2026, with roughly US$80 million tied to growth projects such as offshore configured AW189s. If supply chain delays or weaker activity in target markets like Brazil, Africa or the North Sea limit utilization, the company could face under earning assets that weigh on returns and free cash flow.
• Advanced air mobility partnerships and trials, including the all electric Beta CX300 in Norway, are still early stage with no contribution assumed in current guidance and long lead times before potential certification and deployment. If commercial adoption is slower or economics are less attractive than hoped, this could limit any long term uplift to revenue and earnings from new platforms.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Bristow Group is $70.0, which represents up to two standard deviations above the consensus price target of $62.0. This valuation is based on what can be assumed as the expectations of Bristow Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $56.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $1.9 billion, earnings will come to $208.6 million, and it would be trading on a PE ratio of 13.8x, assuming you use a discount rate of 8.5%.
• Given the current share price of $43.88, the analyst price target of $70.0 is 37.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.