JPMorgan believes offshore construction and dredging, a niche area of U.S. infrastructure, will improve for the first time in years due to increased government spending. The investment bank initiated research coverage with an Overweight rating on Orion Group and Great Lakes Dredging Dock on Thursday. Both companies are players in the U.S. dredging market with close ties to the energy industry and are both based in Houston, and analyst Tomohiko Sano expects both companies to have double-digit profit growth going forward. Sano’s year-end price target of $16 for Orion suggests the stock will rise more than 40% from Wednesday’s closing price. The analyst’s appointment comes after a site visit to Orion’s Tampa office and Clearwater Marina project, which highlighted the company’s operational strengths and corporate culture. “We believe ORN’s macro exposure and improved operating trajectory under new leadership will support sustained revenue growth and margin expansion,” the analyst said. Sano praised Orion’s offshore construction portfolio, which he said has enabled the company to win a series of projects and attract diverse funding sources. The stock is also benefiting from the U.S. infrastructure and data center construction boom, and its strong order backlog is expected to drive strong demand. Analysts think 2026 revenue could increase 6% year over year to $896 million. Orion’s concrete division is another strategic growth engine, giving it exposure beyond marine infrastructure to other end markets such as data centers and making the company an indirect beneficiary of artificial intelligence investments, Sano said. “This diversification expands ORN’s addressable market and positions the company to benefit from megatrends such as AI-driven digital infrastructure, reshoring, and population growth in key Sunbelt regions, supporting long-term revenue resilience and growth.” Orion Group stock rose 9% on Thursday and has soared 44% in the past three months alone, according to FactSet data. JPMorgan has a $20 price target on Great Lakes Dredging Dock, up 35% from Wednesday’s closing price. Shares were up 11% on Thursday and are now up 49% in the past three months. Touting its dominance as the United States’ largest dredging contractor for the Great Lakes, Sano wrote that the company currently holds a 35% market share and operates a highly diversified fleet. “On-site management discussions confirmed that we are uniquely positioned to benefit from increased demand from port deepening, coastal protection and climate restoration projects,” Sano said. “These expanding opportunities in the infrastructure sector provide GLDD with a strong foundation for future growth and continued industry dominance.” Sano highlighted that Godai Lakes’ $1 billion order backlog and approximately $194 million in pending award value give the company “very strong revenue prospects through 2026.” The company entered the offshore energy business to maintain wind turbines and its modernized equipment also strengthens its market position and diversifies its revenue sources, supporting wider profit margins and faster growth than its competitors. Sano added that this also strengthens the basis for the company’s overvalued valuation of the company’s stock. The government’s record infrastructure spending should be a tailwind for the Great Lakes, while the company’s fleet upgrades should improve profitability by increasing margins and operating efficiencies and improving free cash flow.
