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Based in Reston, Virginia, Leidos Holdings, Inc. (LDOS) is a global science and technology leader that provides services and solutions in the defense, intelligence, civil, and health markets. Valued at a market cap of $19.3 billion, the company's core capabilities include providing solutions in the fields of cybersecurity, data analytics, enterprise IT modernization, operations and logistics, sensors, collection and phenomenology, software development, and systems engineering.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” and Leidos fits the label perfectly with its market cap exceeding this threshold. The tech company is known for rapidly addressing the world's most vexing challenges in national security and health through innovation and with the help of its over 48,000 employees.
Despite its strengths, the company has declined 28.6% from its 52-week high of $202.90, achieved on Nov. 12. Moreover, it has fallen 7.8% over the past three months, significantly underperforming the broader S&P 500 Index’s ($SPX) 4% returns over the same time frame.
Nonetheless, in the longer term, LDOS has rallied 36.8% over the past 52 weeks, significantly outpacing SPX’s 26.2% returns. Meanwhile, shares of LDOS are down 1.2% over the past six months, trailing behind SPX’s 8.4% gains over the same time frame.
To confirm its recent bearish trend, LDOS has been trading below its 200-day moving average since mid-December and has remained below its 50-day moving average since mid-November.
LDOS’ shares closed up 9.5% after the release of its strong Q3 results on Oct. 29. The company’s revenue of $4.19 billion improved by 6.9% from the year-ago figure and surpassed the forecasted figure by 3.7%. Robust growth in demand across all of its customer segments, primarily for managed health services programs, contributed to its revenue growth.
Moreover, a 32% year-over-year increase in adjusted EBITDA to $596 million, mainly driven by Leidos’s efficient cost control initiatives, led to a massive 44.3% annual growth in its adjusted EPS to $2.93, which outpaced the consensus estimates by a whopping 49.5%.
The company also raised its full-year 2024 earnings guidance to $9.80-$10 per share and revenue guidance in the range of $16.35 billion to $16.45 billion. This might have further bolstered investor sentiments.
LDOS has outperformed its competitor, CACI International Inc (CACI), which gained 27.5% over the past 52 weeks but dropped almost 6.5% over the past six months.
Despite LDOS’ recent underperformance, analysts remain strongly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 14 analysts covering it, and the mean price target of $190.43 suggests a massive 31.5% premium to its current levels.
