On Wednesday, investment firm TD Cowen raised its price target on shares of Leidos Holdings (NYSE:LDOS), a science and technology solutions company, to $200 from $175. The firm maintained its Buy rating on the stock.
The adjustment comes as the analyst at TD Cowen anticipates a strong performance from the company's Health segment, expecting sustained margins of over 20%. Additionally, the analyst forecasts accelerating gains in the National Security & Digital sectors and sees potential for increased margins from other programs.
Leidos Holdings, which specializes in defense, aviation, information technology, and biomedical research, has been identified by the analyst as approaching a significant "pivot" year in 2025. The firm believes that while 2025 will be solid, the growth trajectory for Leidos is expected to become more pronounced in 2026.
The raised price target to $200 is based on a 14.0x multiple of the company's projected 2025 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). This financial metric is a commonly used gauge of a company's operating performance.
Leidos Holdings has been recognized by the analyst for its potential in key growth areas, positioning it for a positive outlook in the coming years. The company's stock will continue to be observed by investors as it approaches the pivotal years highlighted by TD Cowen.
In other recent news, Leidos Holdings Inc. has been awarded a new contract by the Naval Supply Systems Command (NAVSUP) Fleet Logistics Center. The contract, known as the Technical Assistance for Repairables Processing (TARP), aims to provide critical supply support for weapons systems. This contract marks the seventh TARP program contract awarded to Leidos since 2000.
In financial developments, Leidos reported a surge in third-quarter earnings, with adjusted earnings per share of $2.93, comfortably surpassing analyst expectations of $2.01. The company's revenue for the quarter was $4.19 billion, exceeding estimates of $4.07 billion. Following these financial results, Leidos raised its full-year guidance for FY2024.
Truist Securities responded to these strong results by increasing its price target for Leidos to $205.00, while maintaining a Buy rating. Leidos also reported strong bookings of $8.1 billion for the quarter, pushing the total backlog to $40.6 billion. Lastly, the company announced a 5.3% increase in its quarterly dividend to $0.40 per share.
InvestingPro Insights
Leidos Holdings' recent performance aligns with TD Cowen's optimistic outlook. According to InvestingPro data, the company's stock has shown remarkable strength, with a 104.83% price total return over the past year and a 73.1% return year-to-date. This robust performance is reflected in the stock trading near its 52-week high, at 98.09% of that peak.
The company's financial health appears solid, with revenue growth of 7.86% in the last twelve months as of Q2 2024, reaching $16.01 billion. This growth trend supports TD Cowen's expectations for strong performance across Leidos' segments.
InvestingPro Tips highlight that Leidos has raised its dividend for 6 consecutive years, indicating a commitment to shareholder returns. Additionally, the company is expected to grow its net income this year, which aligns with the analyst's positive outlook for 2025 and beyond.
For investors seeking a deeper understanding of Leidos Holdings' potential, InvestingPro offers 18 additional tips, providing a comprehensive analysis of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.