Costain Group (LSE:COST) shares are 'too cheap' compared to the infrastructure firm's growth potential, so says Panmure Liberum analyst Joe Brent, as the stockbroker repeated a Buy rating.
The bullish call, which comes with a 245p price target, comes after an investor and analyst site visit (to see Costain's operations at a HS2 site) and the broker highlighted that the London-listed firm had showcased its scale, complex tunnelling capability, and management’s deliberate push to broaden revenues.
Brent's commentary, meanwhile, noted that the project has seen around 1m man‑hours per month, across 8,500 workers, and including the use of tunnelling equipment that's 'two football fields long' and weighs over 1,600 tonnes.
Costain's management push now is to build revenues across Water, T&D and Aviation as it prepares to 'smooth the transition' to post-HS2 operations, Brent highlighted.
One such example came earlier today, as Costain was also selected as one of three contractors on Transport for London’s c.£700m, two‑year Infrastructure Improvement Framework, which, as Panmure Liberum notes, increases near‑term visibility.
Looking ahead, the broker anticipates a step‑change in growth in FY27, driven principally by water business, as well as a flow of framework awards and project delivery over the TfL framework.
