Costain Group – broker upped Target Price from 215p to 297p, shares now 177p, cash £190m, making £1m a week profit, market capitalisation £483m

Mark Watson-Mitchell – 02.02.2026

My favourite infrastructure group is winning even more orders and is said to be improving its margins as we proceed into its 2026 Trading Year.

Last Tuesday morning, 27^th January, Costain Group (LON:COST) announced that it had been awarded a contract to design and build a new junction on the M5 motorway, junction 22A.

Awarded through the Regional Delivery Partnership framework, over a five-year period the contract is worth some £100m to Costain.

Junction 22A is a new motorway junction being constructed in Somerset to provide access to the Gravity Smart Campus and £4bn gigafactory being developed by Agratas, which will be Britain's biggest electric vehicle battery manufacturing facility.

Costain's role as the project's delivery integration partner and main works contractor will see it manage the design and construction of the new junction, providing a range of services, including design, engineering, programme delivery and supply chain management.

Management Comment

CEO Alex Vaughan stated that:

"This award is built on our long-established highways delivery expertise and trusted partner relationship with National Highways.

We will work closely with our supply chain partners to design and deliver this new junction that will provide access to the new gigafactory and help to drive economic growth in this region of the UK.

This investment, supporting the UK's growth ambitions, is another example of Costain's commitment to deliver critical national infrastructure programmes that improve people's lives."

Broker’s View

Analyst Max Hayes, at Cavendish Capital Markets, really rates this group’s shares as a Buy.

Impressed by the company’s strong net cash balance, together with its margin profile, he has increased significantly his Target Price for the shares from 215p to 297p.

For the 2025 trading year to end-December, he has revenues of £1,050m (£1,251.1m) with adjusted pre-tax profits of £50.6m (£50.8m) generating earnings of 14.1p (13.9p) and paying out a dividend of 4.2p (2.4p) per share.

This current year, 2026, he sees revenues of £1,272.0m, with £53.0m of profits, 15.2p earnings and a 5.1p dividend.

His estimates for 2027 show £1,394.5m sales, £59.6m profits, earnings of 17.5p and a dividend of 5.8p per share.

He states that:

“Costain's shares have been among the strongest performers in Tier 1 construction, up 101% over the last 12 months.

We believe this reflects its building track record of low-risk delivery, which should continue driving discount compression to peers.

This underpins our 297p price target, based on a peer average EV/EBIT of 10.4x across CY26-27E and supported by Costain's strong net cash balance and premium margin profile.”

My View

This group has a massive Order Book, a

Growing Order Book

strong balance sheet stuffed with some £190m of cash, as compared to its £483m market capitalisation, whilst making a very healthy £1m a week in profits.

Its shares, at 177p, look to me to be totally undervalued and they are destined to break the 200p barrier within the next six weeks leading up to the 2025 Finals being announced on Tuesday 10^th March.

(Profile 05.09.19 @ 155p set a Target Price of 250p)

(Profile 02.08.21 @ 55p set a Target Price of 69p*)

(Profile 24.08.23 @ 50p set a Target Price of 62p*)

(Profile 20.08.25 @ 139p set a Target Price of 175p*)

(Profile 21.01.26 @ 160p set a Target Price of 199.50p)