UBS reiterates Neutral rating on Leidos stock amid VA contract rebound

Published 19/08/2025, 13:56
UBS reiterates Neutral rating on Leidos stock amid VA contract rebound

Investing.com - UBS maintained its Neutral rating and $184.00 price target on Leidos Holdings (NYSE:LDOS), a prominent player in the Professional Services industry with a $22.9 billion market cap, following recent Veterans Benefits Administration (VBA) contract developments. According to InvestingPro data, analyst targets for LDOS range from $164 to $205, with the stock currently showing signs of being slightly undervalued based on Fair Value analysis.

The defense and health technology contractor experienced a significant 60% year-over-year and 35% quarter-over-quarter decline in its second-quarter funded Health & Civil backlog, according to UBS analyst notes.

Despite these declines, Leidos has secured $1.1 billion in VBA obligations in August month-to-date, which UBS indicates has reduced near-term funding and market share concerns.

The last twelve months (LTM) of VBA obligations for Leidos now total $3.0 billion, representing a 21% increase above previous highs and a 140% year-over-year growth.

This recent growth marks a substantial improvement from the more modest 3% LTM growth observed in the second quarter, or 39% when adjusted for the irregular timing of contract awards.

In other recent news, Leidos Holdings Inc. reported strong financial results for the second quarter of 2025, significantly surpassing earnings expectations. The company posted an earnings per share of $3.21, beating the forecast of $2.64 by 21.59%, with revenue slightly above expectations at $4.25 billion. Following the earnings report, UBS raised its price target for Leidos to $184, maintaining a Neutral rating, while Stifel increased its target to $204, retaining a Buy rating, both citing strong quarterly performance. Leidos also secured a $105.5 million contract from the U.S. Department of Defense to provide research support services for the Naval Health Research Center. Additionally, Leidos announced a strategic partnership with Second Front Systems to enhance the delivery of secure software across federal agencies. These developments reflect increased confidence in the company’s revenue visibility and funding environment for the second half of the year.

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