UPDATE: Citigroup Reiterates Buy Rating, Raises PT on Maximus After 1Q13 Earnings Analysis
In a report published Friday, Citigroup reiterated its Buy rating on Maximus (NYSE: MMS), and raised its price target from $75.00 to $85.00.
Citigroup noted, “The biggest catalyst for upside is the FFE eligibility support contract. Maximus bid on the contract, but it's unclear if they bid as prime. We estimate the contract could generate revenue of $75-$235 million in year one, depending on volumes, with margins of 5-8%. We expect awards in late March or early April. The FFE Appeals contract is also out for bid. A vendor can't win both eligibility support and appeals work on the exchanges. However, we view the FFE Appeals RFP as a good alternative if MMS doesn't win FFE eligibility support. The biggest risk to Maximus is if they don't win either contact. Eligibility support and Medicare and state appeals are the company's specialty. However, there will be tough competition from other government vendors.”
Maximus closed on Thursday at $71.35.
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