Leidos (LDOS, Financial) has joined forces with ProtectAI in a strategic effort to bolster the security of artificial intelligence systems utilized by various U.S. government agencies. This partnership seeks to leverage Leidos' proficiency in secure digital transformation alongside ProtectAI's advanced platform to provide comprehensive protection against potential threats targeting AI, especially those involving next-generation autonomous AI models.
By combining their respective strengths, the collaboration aims to deliver enhanced security measures for critical AI applications, ensuring that the systems remain resilient against emerging threats. This move underscores the importance of fortifying AI infrastructures as they become increasingly integral to government operations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for Leidos Holdings Inc (LDOS, Financial) is $165.24 with a high estimate of $185.00 and a low estimate of $148.00. The average target implies an upside of 16.37% from the current price of $142.00. More detailed estimate data can be found on the Leidos Holdings Inc (LDOS) Forecast page.
Based on the consensus recommendation from 18 brokerage firms, Leidos Holdings Inc's (LDOS, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Leidos Holdings Inc (LDOS, Financial) in one year is $131.97, suggesting a downside of 7.06% from the current price of $142. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Leidos Holdings Inc (LDOS) Summary page.
LDOS Key Business Developments
Release Date: February 11, 2025
- Revenue: Nearly $4.37 billion for Q4, with a robust organic growth rate of 9.7%. Full-year revenue grew 7.9% to $16.66 billion.
- Adjusted EBITDA: $508 million for Q4 with a margin of 11.6%. Full-year adjusted EBITDA was $2.15 billion with a margin of 12.9%.
- Free Cash Flow: $213 million for Q4 and $1.24 billion for the year, up 30% compared to 2023.
- Net Income: Non-GAAP net income was $316 million for Q4 and $1.4 billion for the year.
- EPS: Non-GAAP diluted EPS of $2.37 for Q4 and $10.21 for the year, up 40% from 2023.
- Debt Leverage Ratio: Reduced from 3.4x to 2.2x gross debt-to-adjusted EBITDA.
- Share Repurchases: $406 million worth of shares repurchased in Q4, totaling $850 million for 2024.
- Backlog Growth: Year-over-year backlog growth of 18% with net bookings of $7.6 billion in Q4.
- Operating Cash Flow: $299 million for Q4 and $1.39 billion for the year.
- 2025 Revenue Guidance: Expected between $16.9 billion and $17.3 billion, reflecting growth of up to 4% over 2024.
- 2025 Adjusted EBITDA Margin Guidance: Mid- to high 12% range.
- 2025 EPS Guidance: Non-GAAP diluted EPS between $10.35 and $10.75.
- 2025 Operating Cash Flow Guidance: Approximately $1.45 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Leidos Holdings Inc (LDOS, Financial) exceeded its three-year performance targets set in 2021, achieving an organic revenue growth CAGR of 6.6% and an adjusted EBITDA margin of 12.9%, surpassing goals.
- The company achieved a book-to-bill ratio of 1.7 in the fourth quarter of 2024, marking its highest ever for a December quarter, and an overall book ratio of 1.4 for the year, indicating strong growth momentum.
- Leidos Holdings Inc (LDOS) successfully reduced its gross debt leverage ratio from 3.4x to 2.2x, enhancing financial flexibility for growth initiatives and shareholder value.
- The company reported significant contract wins, including a $2.6 billion follow-on contract with the TSA and a $4.1 billion IDIQ for the IFPC Enduring Shield Air Defense System, supporting future growth.
- Leidos Holdings Inc (LDOS) is well-positioned to benefit from the new administration's focus on government efficiency, IT modernization, and public-private partnerships, aligning with its North Star 2030 strategy.
Negative Points
- Leidos Holdings Inc (LDOS) experienced a 25% decline in stock price since November 12, prompting significant share repurchases to support the stock.
- The company faces challenges from new competitors entering the market with low-cost capital, potentially impacting its ability to maintain profitable growth.
- There are ongoing uncertainties related to the new administration's budget priorities and potential disruptions in federal spending, which could affect future contract awards.
- Leidos Holdings Inc (LDOS) is transitioning away from low-margin work, which may impact revenue growth in the short term as it focuses on higher-margin opportunities.
- The company has a multibillion-dollar classified contract under protest, which has not yet been added to the backlog, creating uncertainty around future revenue recognition.
