JPMorgan raises Leidos target to $205 on strong Federal IT trend By Investing.com
On Tuesday, JPMorgan revised its price target Leidos Holdings (NYSE: NYSE:), a company specializing in information technology services for the federal government. The new target was set at $205.00, up from the previous $185.00, while the company maintained an overweight rating on the stock.
This adjustment follows a series of strong performance reports from Federal IT Services companies, which also saw Leidos Holdings reduce risk to its financial outlook. The improved goal reflects continued high performance, particularly within the Health and Community sector, where Leidos has recently performed well, particularly with regard to re-competitive VA medical trials.
An analyst from JPMorgan noted that strong results in this area seem to indicate that high levels of sales and profits can be maintained for at least the next two years. This projection suggests a stable and potentially better financial position for the company.
Investors’ focus is now likely to shift to the growth potential of Leidos’ other three business divisions. Additionally, the market is anticipating the company’s investor day event, scheduled for March. This event can provide more information about the company’s strategy and growth potential.
In line with this observation, JPMorgan raised its rating for Leidos Holdings. The December 2025 target price of $205 is based on a multiple of 18 times projected 2026 earnings per share (EPS) of $11.35. This target reflects the analyst’s confidence in the company’s ability to continue to deliver strong financial results in the coming years.
In other recent news, Leidos Holdings, Inc. demonstrated strong financial growth, securing a key contract to modernize the Organ Procurement and Transplant Network (OPTN), a key organ transplant data management system.
The contract, awarded by the US Department of Health and Human Services, could be worth up to $235 million. Leidos will compete with other vendors to improve the visibility, functionality, governance, and efficiency of the organ donation and transplant 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 line of 14.2% and a 44% increase in adjusted adjusted EPS. Third-quarter revenue was $4.19 billion, a 7% increase over last year. Leidos raised its 2024 revenue guidance to between $16.35 billion and $16.45 billion and revised EBITDA guidance to a higher range of 12%.
According to the latest developments, the company announced that it has increased its quarterly dividend for the last time and the annual yield of 0.40 %. Additionally, Leidos received $8.1 billion in net bookings, resulting in a total backlog of $40.6 billion. While the National Security and Digital sector faces challenges, the Health & Community sector 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 reaches $25.27 billion, indicating its significant presence in the Technology Services industry. The company’s revenue growth of 7.4% in the last twelve months from Q3 2024 supports the analyst’s positive view of continued high performance.
InvestingPro Tips highlights that Leidos has increased its dividend for 6 consecutive years, indicating a commitment to shareholder returns. This is particularly noteworthy given the company’s strong financial position, with limited debt and profitability over the past twelve months.
The stock’s recent performance has been positive, with a 73.53% year-to-date price return and trading near its 52-week high. This momentum is consistent with JPMorgan’s target price increase and expectations for continued growth across all divisions of Leidos’ business.
Investors looking for a comprehensive analysis can access 16 additional InvestingPro Tips for Leidos Holdings, which provide in-depth information about the company’s financial health and market conditions.
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