Leidos Analyst Bumps Up Price Target By 7% Impressed With Growth Opportunity, Product Strategy

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  • RBC Capital analyst Ken Herbert reiterated a Sector Perform rating on the shares of Leidos Holdings Inc LDOS and raised the price target from $105.00 to $112.00.
  • The company's Dynetics facility in Alabama is a key component of the company's product portfolio, representing about 10% of the total company sales.
  • The analyst believes Dynetics is well positioned in defense growth markets, and it should support top-line growth at the upper end of the company's 5%-6% 2022-2024 growth outlook.
  • Leidos has bagged many hypersonic contracts and has key air defense programs, including IFPC, IFPC High Energy Laser, MuDRaCE, and MFP.
  • Herbert currently models about 5% growth for the Defense Solutions segment in 2023-2024.
  • Management reiterated its strategic justification for the Dynetics acquisition, and highlighted $1.6 billion in business the company has won as a result of having Dynetics in the portfolio.
  • In terms of market segment, the company has raised its growth outlook for its tactical weapons, hypersonic systems, and airborne autonomy the most.
  • Leidos highlighted macro defense factors as growth tailwinds for its Dynetics business, including increased focus on China, an increased focus on defense modernization efforts, and a growing emphasis on rapid, innovative solutions.
  • Also ReadLeidos Registers 4% Revenue Growth In Q3 Aided By Defense, Civil, Health Segments
  • Price Action: LDOS shares are trading higher by 0.75% at $110.44 on the last check Friday.
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