Costain (COST) had been viewed as a safer play on construction with its ‘smart’ infrastructure and technology-led focus. But investors were caught off guard by a profit warning last June precipitated by contract delays and cancellation of the M4 corridor project. The shares lost more than two-fifths of their value and have only fallen further since. As the hits keep coming, we think the crumbling share price is down to more than the ‘Covid-19 crunch’.
Shift to higher-margin work
Long-term infrastructure spending
Working capital pressure
Proposed £100m equity issue