Maximus plunges 16% on Q1 revenue miss, guidance cut
Government services provider narrows full-year outlook below analyst expectations as stock breaks key technical support levels
Maximus shares suffered their worst single-day decline in more than a decade on Thursday, plunging 16% after the government services provider reported first-quarter revenue that fell short of Wall Street expectations and reduced its full-year outlook.
The Reston, Virginia-based company reported revenue of $1.35 billion for the quarter ended December 31, missing the analyst consensus of $1.44 billion. The revenue figure represented a 4.1% decline from the prior-year period, with approximately 1.5 percentage points of the decline attributed to divestiture activities and the remainder to organic movements.
Maximus stock dropped $14.29 to close at $79.40, wiping out approximately $980 million in market capitalization and bringing the company's valuation to about $5.15 billion. The sharp decline pushed shares below both the 50-day moving average of $89.38 and the 200-day moving average of $81.16, key technical support levels that traders watch for signs of trend deterioration.
Despite the revenue shortfall, adjusted earnings per share of $1.85 topped analyst expectations of $1.75. The company also reported adjusted EBITDA margins that came in stronger than anticipated, prompting management to raise its full-year margin outlook to approximately 14%.
The more significant issue for investors proved to be the company's revised full-year guidance. Maximus narrowed its fiscal 2026 revenue forecast to a range of $5.2 billion to $5.35 billion, down from its previous guidance of $5.225 billion to $5.425 billion. The new range falls below the analyst consensus of $5.47 billion, suggesting the company faces headwinds in the coming quarters.
The company did raise its adjusted diluted earnings per share outlook to $8.05 to $8.35 for the full fiscal year, reflecting confidence in its operational efficiency despite the revenue challenges. This guidance represents an increase from previous expectations, highlighting the profitability improvements the company has been able to achieve.
According to Business Wire, Maximus Chief Financial Officer noted that the first-quarter results were "broadly in line with expectations contemplated in November guidance for FY26," suggesting management may not view the performance as materially worse than anticipated. However, the market reaction indicates investors had higher revenue expectations heading into the report.
Maximus, which provides business process services primarily to government health and human services agencies globally, has been navigating a complex operating environment characterized by changing government priorities and evolving regulatory requirements. The company's focus on digital transformation and customer engagement has positioned it to benefit from the modernization of government services, but Thursday's results suggest those tailwinds are not translating immediately into top-line growth.
Analysts maintain a generally positive view on the stock despite the setback. The company currently carries a Strong Buy consensus rating with an average target price of $110, implying significant upside from current levels. Two analysts cover the stock, both rating it a Strong Buy, suggesting the market's severe reaction may present a buying opportunity for long-term investors.
The stock's decline represents a reversal from earlier in the week when shares had been trading near their 52-week high of $100, reached earlier in the fiscal year. Thursday's close of $79.40 compares favorably to the stock's 52-week low of $63.05, indicating that while the drop is significant, the shares remain above their annual trough.
Institutional investors hold approximately 107% of Maximus shares, reflecting high institutional ownership that often exacerbates volatility when companies miss expectations. The heavy concentration of institutional holders means Thursday's decline likely resulted from coordinated selling by multiple large funds.
Looking ahead, investors will focus on Maximus's ability to stabilize revenue growth while maintaining the margin improvements that drove the earnings beat. The company's government-focused business model typically provides stable cash flows, but Thursday's results suggest that even government-facing companies are not immune to market scrutiny around growth trajectories.
The next catalyst for the stock will likely come when the company reports its second-quarter fiscal 2026 results, providing insight into whether the first-quarter revenue decline represents a temporary setback or a more prolonged growth slowdown. Management's commentary during that call will be closely watched for updates on pipeline visibility and contract wins in key government sectors.