Corporate executives and directors are some of the most informed participants in the market. If these insiders are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight a large insider purchase at Dassault Systemes (DSY:FP). Dassault Systemes is a French software company that specializes in three-dimensional (3D) solutions. Its key product, 3DEXPERIENCE, is a business experience platform that is used by businesses across a wide range of industries including aerospace and defense, transportation, life sciences, energy and materials, consumer goods, retail, and construction. The company is listed on the Euronext Paris stock exchange and currently has a market capitalization of €49.6 billion.
Dassault Systemes: Insider Buying
Our insider transaction data shows that on 28 May, Dassault board member Catherine Dassault bought 10,638 DSY shares at a price of €187.65 per share. This purchase cost the insider just under €2 million.
This insider purchase stands out for a couple of reasons. Firstly, it is large in nominal terms. Our data shows that it is the largest purchase since 24 July 2020, when Chairman Charles Edelstenne spent €4.1 million on stock.
Secondly, the purchase has increased the size of the insider’s holding from 3,649 shares to 14,287 shares. This suggests that she is very confident the stock is set to move higher.
It’s also worth noting that previous insider purchases at Dassault Systemes have been timed well. Last March, for example, a number of insiders bought stock. Since then, the stock has risen more than 40%.
Dassault Systemes recently posted strong first-quarter results that were above the high end of the company’s guidance. For the quarter, total revenue was up 8% to €1.17 billion on a non-IFRS basis while software revenue was up 10% to €1.07 billion. Diluted earnings per share came in at €1.14, up 28% at constant currency, while operating cash flow totaled €642 million, up 40% year on year.
On the back of these strong results, the company upgraded its guidance for 2021. The company now expects full-year earnings of €4.24 to €4.28, up from previous guidance of €4.10 to €4.15.
Since these results, a number of brokers, including JP Morgan, Berenberg, Jefferies, Barclays, and Citigroup have lifted their price targets for Dassault Systemes stock. Berenberg raised its target price to €210 from €185 while JP Morgan raised its target price to €210 from €200.
In light of these developments, we see the insider buying here as bullish.