LEIDOS HOLDINGS (+) : Health Risks Overblown; Better Growth Coming - Initiate (+)

研报英文原文证据摘录

LEIDOS HOLDINGS (+) : Health Risks Overblown; Better Growth Coming - Initiate (+)

EQUITIES

AEROSPACE & DEFENSE

LEIDOS HOLDINGS OUTPERFORMPRICE* USD123.0  TARGET PRICE USD165 (UPSIDE 34%)

Health Risks Overblown; Better Growth Coming – Initiate (+)

We think greater clarity on Leidos’s VA claims business contract in 2H will remove an overhang for26 MAY 2026

Securities Research Report the stock. Strong (mid-teens) recent backlog CAGR should drive better organic growth. We initiate

Production time: 11:16* (London time)

at Outperform with $165 PT (33% upside).

Research Analysts & Publishing Entities

Matthew Akers, CFA Health margin risks look overblown

BNP Paribas Securities Corp1 LDOS faces a recompete on its high-margin VA disability exams business (we estimate the VBA

+1 (201) 951-5967

matthew.akers@us.bnpparibas.com contract is ~30-40% of Health revenue), and we believe investors are braced for the worst. While the

recompete is not without risk, we note LDOS went through a similar recompete in 2024, and 18

Cashen Keeler months later is yet to see much of an impact. Consensus has margins moving ~300 bps lower at theBNP Paribas Securities Corp1

+1 (201) 989-2413 Health business, and we think this is too negative (we model ~100 bps lower).

cashen.keeler@us.bnpparibas.com

Portfolio moves give us increased confidence

Luke Leone, CFA LDOS’ recent acquisition of Entrust (~$650M of rev in 2026) further diversifies the business into anBNP Paribas Securities Corp1

+1 (201) 772-1868 energy end market well supported by future energy investment trends, and provides cross-selling

luke.leone@us.bnpparibas.com opportunities to a new customer set. CEO Tom Bell has been disciplined with capital allocation, and

we think the case for this deal is well thought out.