Will Leidos Holdings (LDOS) and Purple Sky Deepen Its Edge in Federal Health IT?

• Leidos and Sky Solutions recently announced the formation of Purple Sky, LLC, a joint venture aimed at supporting U.S. federal health agencies with advanced digital services, cloud, AI, and cybersecurity expertise.
• This partnership is designed to streamline government technology upgrades and enhance public trust, combining Leidos' large-scale deployment experience with Sky Solutions' low-code/no-code platform specialization.
• We'll examine how the newly created Purple Sky joint venture could strengthen Leidos' position in the evolving federal health IT market.

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Leidos Holdings Investment Narrative Recap

To hold Leidos Holdings, an investor needs confidence in the company’s ability to convert federal modernization demand, especially in defense and health IT, into steady, high-quality revenue, while mitigating reliance on unstable government budgets. The new Purple Sky joint venture is a positive for digital health IT capabilities, but its immediate impact on Leidos' most important near-term catalyst, a continued flow of large, recurring government contracts, is not likely to be material. The primary risk remains the company’s exposure to shifts in U.S. government spending priorities.

Among recent developments, the strategic partnership with Sky Solutions to launch Purple Sky, LLC stands out for its relevance to accelerating digital transformation in federal health agencies. This move builds on Leidos' backlog of extensive defense and health contracts, reinforcing its ability to compete for higher-margin, technology-forward projects that align with evolving customer needs. Purple Sky highlights how collaborating with specialists in low-code/no-code platforms can position Leidos for newer, more complex digital government initiatives.

By contrast, the ongoing concentration of Leidos' revenue with a handful of public sector clients exposes investors to potential shocks if budget priorities change or contract competition intensifies...

Read the full narrative on Leidos Holdings (it's free!)

Leidos Holdings' outlook projects $18.6 billion in revenue and $1.5 billion in earnings by 2028. This assumes a 3.0% annual revenue growth rate and a $0.1 billion increase in earnings from the current level of $1.4 billion.

Uncover how Leidos Holdings' forecasts yield a $194.71 fair value, in line with its current price.

Exploring Other Perspectives

Community fair value estimates for Leidos Holdings span US$102 to US$308 from 8 Simply Wall St Community members. While some see significant upside, the risk of sudden shifts in government funding remains a key consideration for your outlook.

Explore 8 other fair value estimates on Leidos Holdings - why the stock might be worth as much as 58% more than the current price!

Build Your Own Leidos Holdings Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Leidos Holdings research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Leidos Holdings research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Leidos Holdings' overall financial health at a glance.

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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.

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