Leidos Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Leidos Holdings, Inc. (NYSE:LDOS) just released its latest first-quarter results and things are looking bullish. The company beat forecasts, with revenue of US$4.0b, some 4.1% above estimates, and statutory earnings per share (EPS) coming in at US$2.07, 47% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Leidos Holdings

Taking into account the latest results, the current consensus from Leidos Holdings' 14 analysts is for revenues of US$16.2b in 2024. This would reflect an okay 3.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 198% to US$7.08. Before this earnings report, the analysts had been forecasting revenues of US$16.0b and earnings per share (EPS) of US$6.77 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.5% to US$152. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Leidos Holdings at US$180 per share, while the most bearish prices it at US$135. This is a very narrow spread of estimates, implying either that Leidos Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Leidos Holdings' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Leidos Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.1% growth on an annualised basis. This is compared to a historical growth rate of 8.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.6% annually. Factoring in the forecast slowdown in growth, it seems obvious that Leidos Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Leidos Holdings' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Leidos Holdings analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Leidos Holdings that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.