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Costain not looking so smart

The smart infrastructure solutions group was hobbled by contract delays, cancellations and disputes in 2019 and is seeking to raise £100m to ease working capital pressures
Costain not looking so smart

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’.

IC TIP: Sell at 38p
Tip style
Sell
Risk rating
High
Timescale
Medium Term
Bull points

Shift to higher-margin work

Long-term infrastructure spending

Bear points

Project issues

Working capital pressure

Proposed £100m equity issue

Dividend cut

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