Shares in Costain saw a significant increase of up to 10 per cent in early London trading following raised price targets from analysts at both Peel Hunt and Panmure Liberum.
The target price for the London-listed construction company was upgraded to 150p from 135p by Peel Hunt, and to 170p from 150p by Panmure Liberum, as reported by City AM.
On Monday, the firm announced a £10m share buyback after its pension scheme reported a surplus for the second year running, leading to a suspension of scheme contributions until July 2026.
Costain confirmed that trading was on track with expectations following new contract wins with the government’s Sizewell C nuclear energy plant and additional work with Anglian Water to deliver an extra 260 kilometres of major strategic pipeline in the East of England.
Panmure Liberum analyst Joe Brent stated: “Costain is well positioned to benefit from the government’s emerging infrastructure plan, and strength in regulated markets like Water and Energy,” adding that “There is a strong, high-quality forward work position. It is helped by recent nuclear wins, and further work with Anglian Water.”
‘A sector that is performing well’
Peel Hunt analyst Andrew Nussey commented on the company’s progress, saying: “Costain is continuing to make operational and strategic progress, supporting a higher quality of earnings and visibility,” and noted that “The shares have performed well in a sector that is performing well.”
He also predicted a positive response from investors, stating: “Investors will likely welcome another buyback and the continued operational momentum. We expect an upbeat outlook statement in August.”
Shares in Costain have surged by nearly a third since the beginning of the year, bringing the company’s market cap to £380m. Alex Vaughan, CEO of Costain, stated: “Over the past three years we have executed on our strategic plans, improved the quality and size of the group’s contract portfolio, delivered on our margin targets, significantly strengthened our net cash position and successfully refinanced our bank and bonding facilities, giving the group the financial strength and capability to support its future growth opportunities.”
Last year, the firm relocated its head office from Maidenhead to the ‘Can of Ham’ building in the City of London.
