LDOS: Near-Term Contract Pipeline Will Drive Continued Margin Upside

Leidos Holdings' analyst price target has increased from $201.83 to $218.08 per share, as analysts cite strong margins in Health and Civil segments, a robust $69 billion pipeline, and raised profitability guidance as driving factors for the upward revision.

Analyst Commentary

Recent analyst reports have highlighted several factors that shape both the bullish and cautious outlooks for Leidos Holdings following its stronger-than-expected earnings performance and revised guidance. The details below summarize the key perspectives from the Street:

• Bullish analysts have raised price targets significantly, citing continued margin strength in Health and Civil segments, which has consistently exceeded expectations.
• Leidos's robust near-term contract pipeline of $69 billion, along with a book-to-bill ratio of 1.3x, is seen as supportive of sustainable long-term growth and revenue visibility.
• Strong execution in strategic areas such as veteran health, border security, and autonomous maritime is viewed as positioning the company for future funding priorities and opportunities.
• Premium valuation is justified by a diverse, well-positioned portfolio and ongoing upside in profitability guidance. New funding acts are also identified as potential growth catalysts.

• Some analysts caution that recent share price strength may limit near-term upside, and that valuation could be sensitive to any execution missteps.
• While the contract pipeline remains healthy, conservative guidance for 2025 reflects market uncertainties, including the potential impacts of government shutdowns.
• There is a note of caution that specific risks, such as lower visibility in certain government funding streams, could pressure results if macro headwinds intensify.

What's in the News

• Leidos will lead assembly, integration, and testing for Starlab's U.S.-based commercial space station, providing end-to-end systems engineering and mission assurance in preparation for the International Space Station's retirement (Client Announcements).
• The company repurchased 559,181 shares for $100.02 million between July and October 2025, completing a total buyback of 16,765,368 shares since February 2022 (Buyback Tranche Update).
• Leidos reaffirmed its 2025 revenue guidance, expecting between $17.00 and $17.25 billion for the fiscal year (Corporate Guidance: New/Confirmed).
• The board increased its quarterly cash dividend to $0.43 per share, up from $0.40, payable at the end of December 2025 (Dividend Increases).
• Leidos announced a partnership with VAST Data Federal and NVIDIA to launch an AI-powered cyber defense platform for faster automated security and real-time data analytics at the enterprise and federal agency level (Strategic Alliances).

Valuation Changes

• Consensus Analyst Price Target has increased substantially, rising from $201.83 to $218.08 per share.
• Discount Rate edged up modestly, from 7.39% to 7.53%, reflecting slightly higher perceived risk or market return expectations.
• Revenue Growth projection has declined from 3.35% to 2.56%, indicating more conservative top-line expectations.
• Net Profit Margin forecast has improved, moving from 8.36% to 8.66%, suggesting stronger profitability assumptions.
• Future P/E (Price/Earnings) ratio estimate has climbed from 18.10x to 19.76x. This indicates a higher valuation relative to forward earnings.