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On Wednesday, Stifel maintained a Buy rating on MAXIMUS, Inc. (NYSE:MMS) with a steady stock price target of $105.00. The firm’s appraisal followed a virtual non-deal roadshow (NDR) with the management of Maximus (NYSE:), which provided insights into the company’s financial outlook and strategies.
According to the firm, Maximus is expected to achieve better margins in fiscal year 2025 (FY25) and experience slower growth, contingent on the success of new business pursuits.
The company is poised for a significant margin expansion opportunity over the next three years, potentially accelerated by contributions from various factors such as Veterans Affairs Medical Disability Examinations (VA MDEs), technology integration, and improvements outside the United States (OUS).
Currently, Maximus is on track to reach approximately a 10% adjusted operating margin this year, with aspirations to hit around 12% as operations outside the United States normalize. While reaching this goal is projected to take several years, the year-on-year margin improvement for FY25 could surpass initial expectations.
The firm has chosen not to adjust its FY25 adjusted earnings per share (EPS) estimate at this time. However, it noted that should growth continue at a rate of 4% or higher, future revisions to estimates could be warranted.
Stifel’s reiteration of the Buy rating and the $105 stock price target reflects confidence in Maximus’s long-term financial prospects and its ability to leverage its current operations for future profitability.
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