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Investing.com - UBS maintained its Neutral rating and $168.00 price target on Leidos Holdings (NYSE:LDOS), currently trading at $159, as the defense contractor faces headwinds in its Veterans Benefits Administration (VBA) medical examination services. InvestingPro data shows the company maintains a GOOD financial health score, with analysts’ targets ranging from $150 to $187.
The VBA services, which have been driving growth and margin expansion in Leidos’ Health & Civil segment, experienced a 34% year-over-year decline in second-quarter obligations, according to UBS analysis. Despite this quarterly drop, the last twelve months (LTM) figures remain positive.
The decline comes as competitors appear to be gaining market share, with total VBA obligations increasing 17% in the second quarter while Leidos’ LTM obligations grew just 3% compared to the overall market’s 40% LTM growth.
New claims have remained steady, indicating stable underlying VBA demand, though completed claims spiked in the second quarter of 2025, contributing to a reduction in the claims backlog.
UBS notes that the VBA’s efforts to reduce its backlog could mean elevated examination volumes in the near term, but cautions that current examination levels may be running above sustainable rates.
In other recent news, Leidos has secured a significant $128 million contract with the FBI to enhance the Next (LON:NXT) Generation Identification system, focusing on agile software development and modernization. Additionally, the company has been awarded a $51.2 million contract by the U.S. Department of Defense to support psychological health research for the Naval Health Research Center. In another development, Leidos received a $22.9 million contract modification from the U.S. Navy to install undersea warfare combat systems. The company also won a $35 million contract to modernize data transfer tools for the Defense Information Systems Agency, aimed at improving data-sharing capabilities. Analyst firm Jefferies has raised its price target for Leidos Holdings to $185, maintaining a Hold rating, and expects the company to report second-quarter earnings in early August. These developments highlight Leidos’ continued involvement in defense and technology sectors through various government contracts.
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