Market report: Costain takes off as City cheers HS2 contract win

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Investors jumped on board Costain today after the engineer was handed one of the contracts for HS2, the UK’s largest infrastructure project.

Shares in the company were up 12.5p, or 3.6%, at 358.25p as it and joint venture partner Skanska were awarded the contract to clear the route for the southern part of the huge project.

The deal for the preparatory works is worth £150 million to Costain over four years.

Management’s attention will now turn to the four civil engineering contracts it is bidding for.

Some of those, which include building tunnels for the high-speed railway, are worth more than £1 billion, signifying an even greater boost to the business’s fortunes. 

Balfour Beatty, which bid for two of the contracts, rose 2.2p to 292.8p. Morgan Sindall, which won the contract for enabling works for the central part of the line, slipped 5.28p to 717.72p.

Analysts at Liberum said it was “disappointing” for Kier and Carillion, which failed to win any of the contracts despite bidding for all three together. They underperformed on a day when shares were on the up, with Kier climbing just 4p at 1419p and Carillion 0.8p higher at 258.4p.

On a busy day of results, most reassured in the face of a gloomy corporate climate, which lifted the FTSE 100 by 63.20 points to 6816.38.

Morgan Stanley gave drug-maker Hikma Pharmaceuticals a shot in the arm with an upgrade to overweight, helping it recover 67p, or 4%, to 1691p after last week’s profit warning. “A steady stream of projects and material opportunities reassure us,” the investment bank said.

Aircraft parts-maker Meggitt reassured the market by avoiding a profit warning of its own in its third-quarter update and by appointing former Rolls-Royce executive Tony Wood as chief operating officer. The shares rose 13.4p to 458.6p.

Dairy Crest, the maker of Cathedral City cheese, sank 26.5p to 570p as broker Jefferies cut its rating to Underperform, concerned by its valuation and an increasing reluctance post-Brexit for retailers to pass on price rises to shoppers.

Specialist asset manager Intermediate Capital Group clawed back post-Brexit losses, surging 59.5p, or 9%, to 693p after its first-half results. Adjusted pre-tax profits were up more than 50% at £133 million, well above the £78 million Numis forecast.

Among the small-caps, AIM-listed big data firm WANdisco improved 2p at 132.5p after winning its second cloud-computing contract since founder David Richards returned to the helm last month after a failed boardroom coup.

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November 16, 2016 |
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