SAIC

Science Applications($SAIC) CEO and Executives Signal Strong Confidence with $689K Cluster Buying After 38% Stock Plunge

03/31/2025 20:58

Shares of Science Applications International Corp ($SAIC), a key player in the military and government services sector, have experienced significant volatility over recent months, attracting investor attention as company executives and board members have stepped up with aggressive stock purchases. Particularly noteworthy is the substantial insider cluster buying concentrated at the end of March 2025. Over just four days from March 25 to March 28, a total of seven executives and directors, including CEO Toni Townes-Whitley, purchased 6,237 shares worth approximately $689,000. This represents a strong signal that company insiders believe the current stock price is undervalued. $SAIC's stock has plummeted from a high of $153 in mid-November 2024 to as low as $95 in early March 2025, erasing about 38% of its value. This decline was largely influenced by concerns regarding the Trump administration's plans for a Department of Government Efficiency and potential defense budget cuts. According to news reported on November 15, 2024, US defense shares and government contractors declined amid uncertainty surrounding Trump's appointments to government efficiency positions. Such policy changes raised widespread concerns about potential direct impacts on companies like $SAIC that heavily rely on government contracts. Despite this downward trend, the company's performance has actually been improving. In December 2024, $SAIC reported adjusted earnings of $2.61 per share for the quarter ending in October, representing a 15% increase year-over-year and significantly exceeding analyst expectations of $2.17. Revenue also grew by 4.3% to $1.98 billion. Similarly, the quarterly results announced in March 2025 for the period ending January 31 substantially exceeded expectations. Adjusted earnings of $2.57 per share represented nearly an 80% increase from the previous year's $1.43 and far surpassed analyst projections of $2.08. Revenue also increased by 5.8% to $1.84 billion. In this context, the concentrated purchasing by the CEO and numerous executives carries special significance. Particularly notable are CEO Toni Townes-Whitley's acquisition of 2,000 shares worth approximately $223,000 on March 28, and EVP Prabu Natarajan's purchase of 2,000 shares worth about $219,000 on March 26, indicating strong confidence in the current stock price from the company's core leadership. Even prior to this cluster buying, $SAIC executives consistently purchased shares during periods of price weakness. During the December 2024 decline, several EVPs including Vincent P. DiFronzo, Srinivas Attili, and Barbara Supplee acquired shares worth approximately $78,000. Additionally, they purchased a total of 3,715 shares worth about $428,000 during June and July 2024, demonstrating consistent buying signals. A striking observation is the overwhelming bias toward purchases in $SAIC's insider transactions. Of the 18 insider transactions reported over the past nine months, 17 were purchases, with only one sale (Director Katharina McFarland's January 13 sale of 3,239 shares). Even in this case, McFarland demonstrated renewed confidence in the company by purchasing 230 shares on March 27, 2025. $SAIC is a provider of technical, engineering, and enterprise IT services primarily serving US government agencies including the Department of Defense, NASA, Department of State, Department of Justice, and Department of Homeland Security. The company focuses on engineering, systems integration, and IT offerings for large, complex government projects, emphasizing differentiated technology services and end-to-end IT infrastructure solutions. According to news reported on March 7, 2025, Trump's "shock and awe" policy agenda has created uncertainty for Virginia businesses, with growing concerns about the impact of federal spending cuts on the Northern Virginia economy. For government contractors like $SAIC, this represents a direct change in their business environment. However, a report from December 9, 2024, offers a more positive outlook, suggesting that Trump's efficiency initiative led by Elon Musk could actually foster partnerships between large defense contractors and smaller tech firms. This could create new opportunities for companies like $SAIC that combine technology with government services. The current average analyst view is "hold" with a 12-month price target of $123. However, the concentrated insider buying suggests strong internal confidence in the company's long-term prospects. If the company can continue to improve performance while adapting to government policy changes, the current stock price could represent an attractive entry point. With a current market capitalization of approximately $5.66 billion, $SAIC is showing cluster insider buying and improving performance despite the stock decline, suggesting the share price may eventually adjust to reflect fundamentals. Nevertheless, uncertainties related to US government budget policies remain a factor that could continue to pressure the stock in the short term.

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