On Tuesday, JPMorgan (NYSE:JPM) revised its price target for Leidos Holdings (NYSE: NYSE:LDOS), a company specializing in information technology services for the federal government. The new target has been set at $205.00, up from the previous $185.00, while the firm retains an Overweight rating on the stock.
The adjustment follows a series of robust performance reports from Federal IT Services companies, which have also seen Leidos Holdings mitigating risks in their financial outlook. The improved target reflects sustained high performance, particularly within the Health & Civil sector, where Leidos has recently excelled, especially regarding the VA medical exams re-compete.
The analyst from JPMorgan noted that the strong results in this area seem to indicate that elevated sales and profit levels could be maintained for at least the next two years. This projection suggests a more stable and potentially improving financial landscape for the company.
The focus for investors is now likely to shift towards the potential for growth in Leidos' other three business divisions. Additionally, the market is anticipating the company's investor day event, which is scheduled for March. This event could provide further insights into the company's strategy and growth potential.
In line with these observations, JPMorgan has increased its estimates for Leidos Holdings. The December 2025 price target of $205 is based on an 18 times multiple of the projected 2026 earnings per share (EPS) of $11.35. This target reflects the analyst's confidence in the company's ability to continue delivering strong financial results in the coming years.
In other recent news, Leidos Holdings, Inc. has demonstrated robust financial growth, securing a significant contract to modernize the Organ Procurement and Transplant Network (LON:NETW) (OPTN), a critical system for managing organ transplant data.
The contract, awarded by the U.S. Department of Health and Human Services, could be worth up to $235 million. Leidos will compete with other vendors to enhance the transparency, performance, governance, and efficiency of the organ donation and transplantation process.
Leidos also reported strong financial performance for the third quarter of 2024, marking its sixth consecutive quarter of growth. The company posted a record adjusted EBITDA margin of 14.2% and a 44% increase in adjusted diluted EPS. Revenue for the third quarter was $4.19 billion, a 7% increase from the previous year. Leidos raised its 2024 revenue guidance to between $16.35 billion and $16.45 billion and adjusted EBITDA guidance to the high 12% range.
In terms of recent developments, the company announced a quarterly dividend increase to $0.40 per share. Additionally, Leidos secured $8.1 billion in net bookings, resulting in a total backlog of $40.6 billion. While the National Security and Digital segment faces challenges, the Health & Civil segment is performing strongly, particularly in managed health services.
InvestingPro Insights
Leidos Holdings' recent performance aligns well with JPMorgan's optimistic outlook. According to InvestingPro data, the company's market capitalization stands at $25.27 billion, reflecting its significant presence in the Professional Services industry. The company's revenue growth of 7.4% over the last twelve months as of Q3 2024 supports the analyst's positive view on sustained high performance.
InvestingPro Tips highlight that Leidos has raised its dividend for 6 consecutive years, indicating a commitment to shareholder returns. This is particularly noteworthy given the company's strong financial position, with a moderate level of debt and profitability over the last twelve months.
The stock's recent performance has been impressive, with a 73.53% year-to-date price total return and trading near its 52-week high. This momentum aligns with JPMorgan's increased price target and the expectation of continued growth across Leidos' business divisions.
Investors looking for more comprehensive analysis can access 16 additional InvestingPro Tips for Leidos Holdings, providing deeper insights into the company's financial health and market position.
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