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Reston, Virginia-based Leidos Holdings, Inc. (LDOS) provides services and solutions in the defense, intelligence, engineering, civil, and health markets. With a market cap of $17.3 billion, the company provides scientific, engineering, systems integration, and technical services and solutions.
Shares of this global science and technology leader have underperformed the broader market over the past year. LDOS has gained 6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 22.5%. In 2025, LDOS stock is down 8.9%, compared to the SPX’s 4.2% rise on a YTD basis.
Narrowing the focus, LDOS’ underperformance is also apparent compared to the Global X Defense Tech ETF (SHLD). The exchange-traded fund has gained about 42.1% over the past year. Moreover, the ETF’s 14.9% gains on a YTD basis outshine the stock’s single-digit losses over the same time frame.
LDOS' underperformance can be attributed to ongoing supply-chain shortages affecting the defense industry, specifically in critical materials like semiconductors and rare earth elements. These challenges, intensified by global dependence on a few nations, are expected to persist and impact LDOS' operational efficiency and growth prospects. Additionally, margins at the company's defense and intelligence units were below expectations, partly due to a one-time write-down on an airborne surveillance business. With uncertainty surrounding government contracting reform, investors may find better opportunities elsewhere.
On Feb. 11, LDOS shares closed down more than 3% after reporting its Q4 results. Its adjusted EPS of $2.37 beat Wall Street expectations of $2.18. The company’s revenue was $4.4 billion, topping Wall Street forecasts of $4.1 billion. LDOS expects full-year adjusted EPS in the range of $10.35 to $10.75, and expects revenue to be between $16.9 billion and $17.3 billion.
For fiscal 2025, ending in December, analysts expect LDOS’ EPS to grow 4% to $10.62 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 15 analysts covering LDOS stock, the consensus is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, and five “Holds.”
This configuration is more bullish than a month ago, with nine analysts suggesting a “Strong Buy.”
On Feb. 17, Citigroup Inc. (C) kept a “Buy” rating on LDOS and lowered the price target to $180, implying a potential upside of 37.1% from current levels.
The mean price target of $177.60 represents a 35.3% premium to LDOS’ current price levels. The Street-high price target of $220 suggests an ambitious upside potential of 67.6%.
