May Gurney, a support services company, has been awarded Harrow Council's highways maintenance contract, valued at up to £50m.
The contract, which starts in April 2012, has an initial contract period of five years with an option to extend for a further two years.
The contract has been awarded in three "bundled services" lots and includes maintenance of the council's key infrastructure assets.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
May Gurney's current forward order book stands at £1.5bn and it has a strong pipeline of bidding opportunities and potential contract extensions worth in excess of £4bn in May Gurney's core markets.
Peel Hunt commented on the news, saying: "We regard this as another important win and demonstrates the positive momentum across the group."
The broker left its earnings estimates unchanged, however, though it reiterated its "buy" recommendation, saying: "May Gurney continues to demonstrate its 'defensive' growth and cash characteristics, arising from its focus on non-discretionary services."
Northland Capital Partners was also positive: "May Gurney continues to make steady progress in both revenue and earnings and remains debt free. The on-going public sector cuts in the UK should offer further outsourcing opportunities and the scale of the order book provides a degree of reassurance and visibility," the broker said.
The shares trade on a multiple of 10 times Northland's projected earnings per share for May Gurney in fiscal 2012, underpinning the broker's "buy" recommendation.
The share price rose 0.87% to 290p by 12:51.
In the doghouse: hundreds of investment funds are underperforming - is it time to sell?
News The latest Spot The Dog research from Bestinvest reveals 151 funds are failing to beat their benchmark. We reveal the worst performers
By Marc Shoffman Published
Nationwide: House prices creep up for the first time in over a year
Nationwide’s latest house price index reveals property prices are finally rising. Will this pattern continue in 2024?
By Vaishali Varu Published