On Wednesday, RBC Capital adjusted its outlook on Leidos Holdings (NYSE:LDOS), a defense, aviation, information technology, and biomedical research company, by increasing the price target to $140 from $120. This revision follows the company's reported earnings for the first quarter of 2024, which surpassed analyst expectations. Leidos Holdings maintained a Sector Perform rating despite the adjustment in the price target.
The company announced an adjusted earnings per share (EPS) of $2.29 for the first quarter, which exceeded the estimated $1.71. Leidos Holdings also reported a total revenue increase of 7.5% year-over-year (YoY) to $4.0 billion. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins expanded by approximately 300 basis points to 12.3%. These strong financial results prompted management to raise the guidance for the full year 2024.
The analyst noted that sentiment towards Leidos Holdings is improving, particularly regarding the company's ability to expand margins. The Health segment, in particular, has been performing better than expected, contributing to the positive outlook. The analyst anticipates a strong setup as the company moves into the second quarter of 2024, with potential for upside to lower volume expectations in the second half of the year.
InvestingPro Insights
Leidos Holdings' recent performance has caught the eye of investors and analysts alike. With a market capitalization of $18.94 billion and a revenue growth of 7.24% in the last twelve months as of Q4 2023, the company is demonstrating its capability to scale effectively. The strong revenue figures align with the positive earnings report that exceeded analyst expectations for Q1 2024, supporting RBC Capital's increased price target.
InvestingPro Tips reveal that Leidos Holdings has raised its dividend for 5 consecutive years and has maintained dividend payments for 13 consecutive years, which is a testament to the company's financial health and commitment to shareholder returns. Additionally, the company's stock has seen a significant return over the last week with a 1 Week Price Total Return of 8.78%, and over the last year, it has generated a 50.84% return. This level of performance may be appealing to investors looking for growth as well as stability in dividends.
For investors seeking a deeper dive into Leidos Holdings' potential, there are 19 additional InvestingPro Tips available, including insights on net income growth expectations and stock volatility. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro to access these valuable insights.
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