Leidos
LDOS
$129.55
+1.10%
Leidos Holdings, Inc. is a technology, engineering, and science company providing services and solutions primarily to the U.S. Department of Defense, Intelligence Community, and other government agencies, operating through segments such as National Security & Digital, Health & Civil, Commercial & International, and Defense Systems. As a leading defense IT and services contractor, Leidos is distinguished by its deep integration into national security missions and its scale, with approximately 47,000 employees. The current investor narrative centers on a sharp share price decline driven by government shutdown concerns, cautious guidance, and a broader selloff in defense tech, despite record profits and a robust backlog. Recent news highlights both the threat of disruption from agile private competitors like Saronic and the company's stable dividend, making it a battleground between value investors and those worried about near-term headwinds.…
LDOS
Leidos
$129.55
Related headlines
Investment Opinion: Should I buy LDOS Today?
Based on the data, Leidos is rated a Hold. The analyst consensus is Buy with an average target of $156.60, implying 17.7% upside, but the stock's weak momentum and macro headwinds warrant caution. The thesis is that Leidos is a fundamentally sound company with a cheap valuation, but near-term risks from government budget uncertainty and revenue deceleration could keep the stock range-bound.
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LDOS 12-Month Price Forecast
The AI assessment is neutral, as the valuation is attractive but the growth outlook is uncertain. The stock's low beta and stable cash flow provide some downside protection, but the decelerating revenue and government budget risks cap upside. If Leidos can demonstrate renewed growth and margin stability, the stance would upgrade to bullish; if revenue turns negative or guidance is cut, it would downgrade to bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Leidos's 12-month outlook, with a consensus price target around $156.60 and implied upside of +20.9% versus the current price.
Average Target
$156.60
0 analysts
Implied Upside
+20.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$125 - $225
Analyst target range
The target price range spans from a low of $125.00 to a high of $225.00, indicating a wide dispersion of 80% between the low and high, which reflects high uncertainty about the company's future. The low target of $125 is only 6% below the current price, suggesting that even the most bearish analysts see limited downside, likely pricing in continued government budget pressures and margin compression. The high target of $225 implies a 69% upside, which would require a significant re-rating, possibly driven by a rebound in defense spending or successful execution of AI and digital transformation contracts. Recent institutional ratings show a mix of Hold and Buy actions, with no major upgrades or downgrades in the last two months, indicating a stable but cautious outlook. The wide spread between targets and the recent downgrade from B of A Securities suggest that while the consensus is positive, there is meaningful disagreement about the pace of recovery, making the stock a higher-risk, higher-reward proposition.
Bulls vs Bears: LDOS Investment Factors
Leidos presents a classic value-versus-momentum dilemma. The bull case rests on a compelling valuation (forward P/E of 10.4x, PEG of 0.82), record profits, and a stable dividend, while the bear case is driven by decelerating revenue, government budget uncertainty, and a severe downtrend. Currently, the bearish momentum and macro headwinds appear stronger, as evidenced by the stock's 25.5% annual decline and underperformance versus the S&P 500. The single most important tension is whether the company can reignite revenue growth and navigate government budget pressures; if it does, the stock could re-rate significantly, but if not, further downside toward the 52-week low of $98.86 is possible.
Bullish
- Undervalued on forward earnings: LDOS trades at a forward P/E of 10.41x, well below the market average and its own historical range. With a PEG of 0.82, the stock appears cheap relative to expected earnings growth, suggesting the market has priced in excessive pessimism.
- Record profits and strong cash flow: Despite revenue headwinds, Leidos posted record net income of $328 million in Q1 2026, with TTM free cash flow of $1.86 billion. The company's ability to generate cash supports its dividend and provides flexibility for buybacks or acquisitions.
- Robust backlog and government contracts: Leidos serves critical U.S. defense and intelligence agencies, with a backlog that provides revenue visibility. The company's deep integration into national security missions makes it a strategic partner, reducing the risk of contract loss.
- Stable dividend with low payout: Leidos pays a dividend yield of 0.87% with a payout ratio of only 14.5%, leaving ample room for increases. The dividend provides a modest income cushion and signals management confidence in cash flow stability.
Bearish
- Sharp downtrend and underperformance: LDOS is down 25.5% over the past year, while the S&P 500 gained 18.65%. The stock sits near the lower end of its 52-week range (33.5% of the range), indicating persistent selling pressure and negative momentum.
- Decelerating revenue growth: Q1 2026 revenue grew only 3.65% YoY, down from 6.7% in Q3 2025 and following a -3.6% decline in Q4 2025. The company missed revenue expectations, and the Commercial & International segment remains a drag.
- Government shutdown and budget risks: Recent news highlights that government shutdown concerns and cautious guidance overshadowed record profits, sending shares down 6%. Leidos is heavily dependent on U.S. government spending, making it vulnerable to budget cuts or shutdowns.
- Competitive disruption from agile startups: Private companies like Saronic are rapidly developing autonomous naval vessels, potentially disrupting traditional defense contractors. If the Navy shifts to faster, cheaper solutions, Leidos could lose market share in key programs.
LDOS Technical Analysis
Leidos is in a pronounced downtrend over the past year, with the stock down 25.5% over the last 12 months, significantly underperforming the S&P 500, which gained 18.65% over the same period. The current price of $133.05 sits at 33.5% of its 52-week range (between the low of $98.86 and high of $205.77), indicating the stock is trading near the lower end of its yearly range, which often suggests either a value opportunity or a falling knife depending on fundamental catalysts. The stock has experienced a maximum drawdown of -49.89% from its highs, reflecting severe investor de-risking.
Beta
0.57
0.57x market volatility
Max Drawdown
-49.9%
Largest decline past year
52-Week Range
$99-$206
Price range past year
Annual Return
-28.2%
Cumulative gain past year
| Period | LDOS Return | S&P 500 |
|---|---|---|
| 1m | -8.0% | -1.6% |
| 3m | +6.0% | +2.2% |
| 6m | -25.5% | +14.4% |
| 1y | -28.2% | +16.2% |
| ytd | -29.4% | +11.1% |
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LDOS Fundamental Analysis
Leidos reported revenue of $4.4 billion in Q1 2026 (ending April 3, 2026), up 3.65% year-over-year, but this growth is decelerating compared to prior quarters: Q2 2025 saw 2.9% growth, Q3 2025 saw 6.7%, and Q4 2025 saw -3.6% (a decline). The most recent quarter's revenue missed expectations, contributing to the stock's slide. The company's revenue trajectory remains positive but modest, with a TTM revenue of approximately $17.3 billion, and growth is being driven by defense and health segments, though the Commercial & International segment has been a drag.
Quarterly Revenue
$4.4B
2026-04
Revenue YoY Growth
+3.6%
YoY Comparison
Gross Margin
17.3%
Latest Quarter
Free Cash Flow
$1.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LDOS Overvalued?
Given that Leidos is profitable with a trailing net income of $1.3 billion, the PE ratio is the most appropriate valuation metric. The trailing PE is 16.35x, while the forward PE is 10.41x, implying the market expects significant earnings growth (about 57% increase) over the next year, which is optimistic given the company's modest revenue growth and margin pressures. The PEG ratio of 0.82 suggests the stock is undervalued relative to its expected earnings growth, but this is based on forward estimates that may be revised downward.
PE
16.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 12x~21x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are elevated due to Leidos' high debt-to-equity ratio of 1.21 and rising interest expenses, which totaled $55 million in Q1 2026. While the company generates strong free cash flow ($1.86 billion TTM), its revenue growth has decelerated to 3.65% YoY, and gross margins have slipped to 17.3% from 18.4% a year earlier. The payout ratio of 14.5% is low, but any prolonged margin compression or cash flow shortfall could strain the balance sheet and limit capital returns. Additionally, the company's reliance on government contracts creates concentration risk, as a single segment (National Security & Digital) likely accounts for a large portion of revenue.
FAQ
The key risks include: 1) Government budget cuts or shutdowns, which could reduce revenue and delay contracts; 2) Competitive disruption from private defense startups like Saronic, which could erode market share; 3) Financial risks from high debt (D/E of 1.21) and margin compression (gross margin fell to 17.3%); 4) Macro risks such as interest rate changes, though the low beta of 0.57 provides some insulation. The most severe risk is a prolonged government shutdown, which could send the stock to its 52-week low of $98.86, a 25.7% downside.
The 12-month forecast is mixed: the bull case (25% probability) targets $160-180, driven by a defense spending rebound and contract wins; the base case (50% probability) targets $135-155, with modest growth and stable margins; the bear case (25% probability) targets $100-115, if budget cuts and competitive pressures hit. The most likely scenario is the base case, with the stock moving toward the analyst average target of $156.60, but the wide range of analyst targets ($125-$225) reflects high uncertainty. Investors should monitor government budget news and quarterly earnings for direction.
LDOS appears undervalued based on its forward P/E of 10.4x, which is well below the market average of around 20x. The PEG ratio of 0.82 also indicates undervaluation relative to expected earnings growth. However, the market is pricing in a 57% earnings increase over the next year, which may be optimistic given the modest revenue growth. Compared to its own history, the stock is trading at a discount, as its trailing P/E of 16.35x is below the 5-year average. Overall, the valuation is attractive, but the low multiple reflects the market's concerns about growth and government spending.
LDOS is a good buy for value-oriented investors with a long-term horizon, given its forward P/E of 10.4x and PEG of 0.82, which suggest undervaluation. The stock offers a 0.87% dividend yield and has a Buy consensus with an average target of $156.60, implying 17.7% upside. However, the stock is in a downtrend, down 25.5% over the past year, and faces risks from government budget cuts and revenue deceleration. Therefore, it is not a good buy for short-term traders or those seeking momentum, but for patient investors, the risk/reward is attractive at current levels.
LDOS is more suitable for long-term investment due to its stable cash flow, dividend, and government contracts, which provide earnings visibility. The stock's beta of 0.57 indicates lower volatility than the market, but it has been in a downtrend, making short-term trading risky. The company's growth is modest, so capital appreciation may take time. A minimum holding period of 3-5 years is recommended to allow for a potential re-rating and recovery in defense spending. Short-term traders may find opportunities in oversold bounces, but the overall trend is bearish.