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Maximus: Maximised on Insider Buying
Stock Analysis & Ideas

Maximus: Maximised on Insider Buying

Story Highlights

Maximus is seeing a spike in interest from corporate insiders as they have been buying into the stock. However, investors seem to be pessimistic about the stock due to its Q1 earnings. What does this mean for the stock?

Maximus (NYSE: MMS) is a provider of government services and was founded in 1975. The company delivers business process management and technology solutions to government agencies around the world.

Interestingly, Maximus has seen heightened insider activity over the past three months.

According to the company’s filings, Maximus’s top executives have been buying the stock. On June 15, Bruce Caswell, the company’s CEO and President, bought 8,300 shares for $60.32 per share. Moreover, John Haley, a Director of the company, also bought 18,000 shares on June 15 at a price of $60.32 per share.

Taken together, these corporate insiders bought shares worth $1.5 million. The TipRanks’ Insider Trading Activity tool indicates that corporate Insiders are positive about the stock, and in the past three months alone, corporate insiders have bought shares worth $2.6 million.

Further, most of these transactions have come in the form of an Informative Buy and Sell (insiders used their own capital to execute these trades).

Q2 Results

Interestingly, investors seem to be pessimistic about the stock as MMS has slid 24.7% this year and 6.3% in the past month alone. This downslide in the stock has been further exacerbated by Maximus’s Q2 results.

Maximus generated revenues of $1.18 billion in Q2, up 22.7% year-over-year, primarily driven by “anticipated contributions from the U.S. Federal Services Segment acquisitions and the U.K. Restart Programme in the Outside the U.S. Segment.”

However, diluted earnings declined to $1.07 per share, adjusting for amortization, versus $1.35 in the same period last year.

On its earnings call, David Mutryn, Maximus’s CFO, said, “Second quarter earnings reflected our expectation for lower earnings caused primarily by delays in our core programs returning to pre-pandemic levels as the COVID response work continues its predicted decline.”

While the company’s management maintained its FY22 revenue guidance to range between $4.5 billion and $4.7 billion, it expects diluted earnings on an adjusted basis to be between $3 and $3.50 per share, or from $4.07 to $4.57 per share.

Only one analyst has covered the stock in the past three months. Raymond James analyst Brian Gesuale is optimistic about the stock with a Buy rating. The average Maximus price target of $80 implies an upside potential of 32.1% at current levels.

Bottom Line

While Maximus is seeing a high level of interest from corporate insiders, analyst Gesuale is cautiously optimistic about the stock as it is still unclear how the company will be affected by the PHE delay.

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