RESTON, Va. - Leidos (NYSE:LDOS), a Fortune 500 company specializing in national security and health solutions, has been awarded an $823 million task order by the Defense Information Systems Agency (DISA) to support operations and sustainment of the Defense Enclave Services (DES) Department of Defense Network (DoDNet) program. This task order, part of a larger $11.5 billion DES contract, is aimed at optimizing network services as part of a broader effort to modernize and consolidate network infrastructure for the Fourth Estate Defense Agencies and Field Activities (DAFAs).
The five-year task order will extend support to over 160,000 users, including the integration of 14 additional DAFAs into the DoDNet, a significant increase from the initial 30,000 users. Leidos will focus on ensuring that the DoDNet environment remains secure, scalable, and operational, providing critical IT solutions such as cybersecurity support, systems engineering, network architecture and management, and comprehensive technical support. Once fully implemented, DoDNet is expected to support approximately 370,000 DAFA users and workstations.
An integral part of this modernization includes the introduction of a new Virtual Desktop as a Service solution, which aligns with DISA's strategic vision for DoDNet to deliver a reliable network accessible anytime, anywhere, and on any device.
Steve Hull, president of Leidos' digital modernization sector, emphasized the company's commitment to innovation and agility in delivering an exceptional user experience and establishing robust operations and maintenance support to expand the DoDNet user community. Hull highlighted the standardized DoDNet's role in enabling more efficient service delivery and support across DAFAs, with the ultimate goal of advancing the mission of the nation's warfighters and securing combat operations globally.
Leidos has been a key player in the operations of the DES program since February 2022. The company, headquartered in Reston, Virginia, employs a global workforce of 47,000 and reported annual revenues of approximately $15.4 billion for the fiscal year ended December 29, 2023.
In other recent news, Leidos Holdings (NYSE:LDOS) Inc. has been actively securing substantial contracts and dealing with cybersecurity issues. The company recently won a $476 million contract to provide cargo mission support to NASA's International Space Station and Artemis program. Additionally, Leidos secured a $738 million contract to support various U.S. Air Force and Space Force components, and was chosen to overhaul North Dakota's Medicaid Management Information Systems.
On a concerning note, Leidos is currently investigating a significant cybersecurity incident, wherein internal documents were leaked following a cyberattack on a system used by the company. In response to the breach, Leidos is taking swift action to assess the potential impact and address the cybersecurity threat.
In terms of financial performance, Leidos has reported strong quarterly results, leading to upward revisions in its full-year guidance. This has prompted both Truist Securities and Baird to increase their price targets for the company's stock. RBC Capital Markets has maintained its 'Sector Perform' rating on Leidos, indicating a potential reevaluation of the company's stock value due to its engagement in AI technologies.
InvestingPro Insights
Leidos (NYSE:LDOS) continues to demonstrate its capacity for growth and stability in the Professional Services industry, as reflected in the company's recent $823 million task order win. With a market capitalization of $20.64 billion and a solid revenue growth of 7.62% over the last twelve months as of Q1 2024, Leidos is positioned as a robust player in its sector.
Investors should note that Leidos has a track record of rewarding shareholders, having raised its dividend for 5 consecutive years and maintained dividend payments for 13 consecutive years. This consistency is a testament to the company's financial health and commitment to returning value to its investors. An InvestingPro Tip highlights the expectation of net income growth this year, which may further solidify the company's financial position and potentially lead to continued dividend growth, which was 5.56% over the last twelve months as of Q1 2024.
While the company trades at a high earnings multiple, with a P/E Ratio of 65.01, the adjusted P/E Ratio as of Q1 2024 stands at a more moderate 24.88, which could indicate that the market has positive expectations for the company's earnings potential. Additionally, Leidos has been recognized for its low price volatility, which may appeal to investors seeking stable equity performance.
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