Oppenheimer Believes LDOS Won’t Stop Here

By Carrie Williams

Oppenheimer analyst Ian Zaffino initiated coverage with a Buy rating on Leidos Holdings (NYSE: LDOS) today and set a price target of $59. The company’s shares opened today at $51.69, close to its 52-week high of $52.17.

Zaffino observed:

“Fresh off the transforming acquisition of Lockheed Martin’s Information Systems & Global Solutions (IS&GS) business in August 2016, we believe Leidos (NYSE: LDOS) represents an interesting way to play the recovery in government, national security, health and infrastructure spending. Helped by both scale and synergies, we project EBITDA margins could increase by more than 170 bps through 2019, and drive EBITDA to ~$1,136B, vs. ~$888M estimated in 2016PF. We initiate coverage of Leidos Holdings with an Outperform rating and $59 price target, which represents 11.3x 2018E EBITDA, vs. its closest comps at ~11.5x.”

According to TipRanks.com, Zaffino is a 5-star analyst with an average return of 6.1% and a 61.3% success rate. Zaffino covers the Services sector, focusing on stocks such as Macquarie Infrastructure Company, Bristow Group Inc, and Scholastic Corp.

Currently, the analyst consensus on Leidos Holdings is Strong Buy and the average price target is $52.20, representing a 1.0% upside.

In a report issued on November 21, Credit Suisse also upgraded the stock to Buy with a $57 price target.

Based on Leidos Holdings’ latest earnings report for the quarter ending September 30, the company posted quarterly revenue of $1.87 billion and quarterly net profit of $91 million. In comparison, last year the company earned revenue of $1.3 billion and had a net profit of $49 million.

Based on the recent corporate insider activity of 91 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of LDOS in relation to earlier this year.

Leidos Holdings, Inc. operates as a holding company. It provides scientific, engineering, systems integration and technical services and solutions in the areas of defense, health, energy, infrastructure, intelligence, surveillance, reconnaissance and cyber security to agencies of the U.S. Department of defense, the intelligence community, the U.S. department of homeland security, and other U.S. government civil agencies, state and local government agencies, foreign governments and customers in select commercial markets. The company operates its business through the following segments: Health & Engineering, National Security Solutions and Corporate & Other. The Health and Engineering segment provides services and solutions to commercial hospitals and the department of defense as well as conducting research and development for U.S. government and commercial enterprises in the life sciences field. The National Security Solutions segment provides solutions and systems for air, land, sea, space and cyberspace for the U.S. intelligence community, the military services, and the U.S. department of homeland security. The Corporate and Other segment includes the operations of various corporate activities, certain expense items that are not reimbursed by its U.S. Government customers. Leidos Holdings was founded by John Robert Beyster on February 3, 1969 and is headquartered in Reston, VA.