On Tuesday, Stifel has increased its price target for Leidos Holdings (NYSE: NYSE:LDOS) to $138 from the previous $125, while reaffirming its Buy rating on the stock. The adjustment follows Leidos' fourth-quarter adjusted earnings per share (EPS) of $1.99, surpassing both the consensus estimate of $1.74 and Stifel's own estimate of $1.77. The company's revenue also exceeded expectations.
Leidos reported robust financial outcomes, with management providing an upbeat guidance for 2024. The forecasted adjusted EPS is between $7.50 and $7.90, which is above the market projection of $7.61. This positive outlook is attributed to an improved margin profile, anticipated to be in the mid-to-high 10% range compared to the expected mid-10%, and lower tax rates. The sales projection stands at $15.7 to $16.1 billion, with cash from operations around $1.1 billion, aligning with current expectations.
The company's guidance incorporates a degree of caution due to potential budget uncertainties.
"Leidos has committed to promises made, promises delivered philosophy since Tom Bell joined as CEO, so we see this guidance as a starting not an ending point for the year, absent any surprises on the budget front," said Stifel analysts in the note.
Stifel's positive stance on Leidos is bolstered by the company's improving fundamentals and a low net leverage profile, which positions it well for potentially increased capital returns to shareholders.
InvestingPro Insights
Leidos Holdings (NYSE: LDOS) has been on the radar for analysts and investors alike, and recent movements in its stock price and fundamentals suggest a closer look is warranted. As Stifel increases its price target for Leidos, real-time data from InvestingPro provides additional context to the company's financial health and market position.
InvestingPro Data shows Leidos with a market capitalization of $16.55 billion, indicating a solid presence in the market. Despite a high P/E ratio of 112.05, the adjusted P/E ratio for the last twelve months as of Q3 2023 stands at a more reasonable 23.13. This discrepancy suggests that while the stock may appear overvalued on a trailing basis, adjustments for forecasted earnings paint a different picture. The company's revenue growth also remains strong, with a 6.8% increase over the last twelve months as of Q3 2023, signaling continued business expansion.
An InvestingPro Tip notes that Leidos has raised its dividend for 5 consecutive years, showcasing a commitment to returning value to shareholders. This is complemented by the company's dividend yield of 1.33% and a dividend growth rate of 5.56% over the last twelve months as of Q3 2023. For investors seeking stable income, these factors may be particularly appealing.
Moreover, Leidos is identified as a prominent player in the Professional Services industry. This distinction, coupled with the company's consistent profitability over the last twelve months and predictions of continued profitability this year, underlines the firm's industry strength and operational efficiency.
For readers interested in a deeper dive into Leidos Holdings' performance and potential, InvestingPro offers additional insights. There are 10 more InvestingPro Tips available, which can provide further guidance on the stock's outlook. For those looking to access these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Visit https://www.investing.com/pro/LDOS to explore these valuable tips and make more informed investment decisions.
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