Leidos Analyst Bumps Up Price Target By 7% Impressed With Growth Opportunity, Product Strategy

RBC Capital analyst Ken Herbert reiterated a Sector Perform rating on the shares of Leidos Holdings Inc LDOS and raised the price target from $105.00 to $112.00.
The company's Dynetics facility in Alabama is a key component of the company's product portfolio, representing about 10% of the total company sales.
The analyst believes Dynetics is well positioned in defense growth markets, and it should support top-line growth at the upper end of the company's 5%-6% 2022-2024 growth outlook.
Leidos has bagged many hypersonic contracts and has key air defense programs, including IFPC, IFPC High Energy Laser, MuDRaCE, and MFP.
Herbert currently models about 5% growth for the Defense Solutions segment in 2023-2024.
Management reiterated its strategic justification for the Dynetics acquisition, and highlighted $1.6 billion in business the company has won as a result of having Dynetics in the portfolio.
In terms of market segment, the company has raised its growth outlook for its tactical weapons, hypersonic systems, and airborne autonomy the most.
Leidos highlighted macro defense factors as growth tailwinds for its Dynetics business, including increased focus on China, an increased focus on defense modernization efforts, and a growing emphasis on rapid, innovative solutions.
Also Read: Leidos Registers 4% Revenue Growth In Q3 Aided By Defense, Civil, Health Segments
Price Action: LDOS shares are trading higher by 0.75% at $110.44 on the last check Friday.