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On Wednesday, Citi analysts updated their stance on Leidos Holdings (NYSE:LDOS), a company specializing in defense, aviation, information technology, and biomedical research. The price target for Leidos stock has been increased to $186 from the previous $180, while the firm continues to recommend a Buy rating for the stock. Currently trading at $154.75 with a market capitalization of $19.92 billion, InvestingPro analysis suggests the stock is currently undervalued, supporting Citi’s bullish stance.
The adjustment comes as Leidos surpassed consensus expectations for the quarter while affirming its full-year guidance despite facing minor challenges. These challenges include contracting actions by the new Administration and some uncertainty about near-term demand due to changes in Washington. The company’s solid financial health, evidenced by its GOOD rating on InvestingPro’s Financial Health Score, along with a 7.75% revenue growth, reinforces its resilience. The company’s alignment with the Administration’s priorities, notably in missile defense and FAA modernization, suggests potential for more opportunities than risks looking ahead.
Leidos has been proactive in its strategic moves, marked by its first acquisition under the current CEO’s leadership, focusing on the offensive and defensive cyber domain. Additionally, the company successfully completed an accelerated share repurchase (ASR) and raised debt during the quarter, indicating a forward-leaning approach.
In their commentary, Citi analysts highlighted, "The company appears well aligned with the Administration’s priorities, including missile defense and FAA modernization, and there are likely more opportunities than risks in the medium to long-term." This optimistic outlook is further supported by the company’s recent actions, such as the strategic acquisition and financial maneuvers aimed at strengthening its market position.
The raised price target to $186 reflects Citi’s confidence in Leidos’ future performance as the company rolls its estimates forward, taking into account the recent positive developments and the strategic alignment with governmental priorities. Trading at a P/E ratio of 14.92, the stock shows attractive valuation metrics. For deeper insights into Leidos’ financial health and growth prospects, including 12 additional ProTips and comprehensive valuation analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Leidos Holdings Inc reported impressive financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $2.97, exceeding the forecast of $2.50, and reported revenue of $4.25 billion, which was above the anticipated $4.09 billion. This robust performance was marked by a 7% organic revenue growth year-over-year and a 23% increase in adjusted EBITDA, reaching $601 million. Leidos also reaffirmed its full-year 2025 guidance, projecting revenue between $16.9 billion and $17.3 billion. Additionally, the company announced a definitive agreement to acquire a leader in full-spectrum cyber, marking its first acquisition in two and a half years. Analyst firm Cantor Fitzgerald noted that Leidos’ Health and Civil segment saw significant growth, driven by strong demand in their managed health business. The company also emphasized its strategic focus on five growth pillars, including space, maritime, and digital modernization, aligning with the new administration’s priorities.
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