Core Insights - Leidos has appointed Theodore "Ted" Tanner Jr. as the new Chief Technology Officer to enhance its focus on artificial intelligence and other advanced technologies [1][2] - Tanner's experience includes leadership roles in AI development for defense and healthcare, aligning with Leidos' strategic goals [4][5] - The company's NorthStar 2030 strategy aims to differentiate itself in various sectors, including space, cyber, and health services, leveraging AI for improved outcomes [3] Company Overview - Leidos is a technology leader serving government and commercial clients, with approximately 47,000 employees and annual revenues of about $16.7 billion for the fiscal year ending January 3, 2025 [6]

Company Overview - Leidos Holdings, Inc. is a major U.S. defense, aviation, and technology solutions provider with a market cap of $23.6 billion, serving government and commercial clients across national security, digital modernization, healthcare systems, and advanced engineering [1] - The company is recognized for its large federal contracts, particularly with the Department of Defense and intelligence agencies, positioning it as a key contractor in cybersecurity and next-generation defense technologies [2] Stock Performance - Leidos reached a 52-week high of $205.77 on November 4 and is currently trading 8.5% below that peak, with a 4.4% increase over the past three months, compared to the Technology Select Sector SPDR Fund's (XLK) 10.1% surge [3] - Year-to-date, the stock has gained 30.7% and 17.6% over the past 52 weeks, outperforming XLK's 27.9% gains in 2025 but lagging behind its 26.1% surge over the past year [4] - The stock has traded above its 200-day moving average since late June but dipped below its 50-day moving average in recent trading sessions [4] Recent Contracts and Achievements - On December 4, Leidos shares rose 2.1% after securing a new three-year, $127 million contract to manage Hawai'i's Energy and EV Charging Station Rebate programs, contributing to clean energy adoption and efficiency in the state [5] - Since 2009, the company has managed the Hawai'i Energy program, achieving over $7 billion in energy savings and issuing more than 18,000 rebates in the latest program year [5] Competitive Position - Compared to its peer, Leidos has significantly outperformed Booz Allen Hamilton Holding Corporation, which has seen a 27.7% decline year-to-date and a 34.4% plunge over the past 52 weeks [6]

Core Insights - Leidos and CargoSeer have partnered to enhance non-intrusive inspection and security solutions for customs and border protection agencies, demonstrating Leidos' commitment to improving border security [1][3] - The integration of CargoSeer's advanced trade-analysis algorithms into Leidos' Mezzo™ Enterprise Software Platform will provide agencies with instant, actionable intelligence, facilitating smarter and faster decision-making regarding security risks and trade compliance [2][3] Company Overview - Leidos is a leader in technology and services for government and commercial customers, with approximately 47,000 global employees and reported annual revenues of about $16.7 billion for the fiscal year ending January 3, 2025 [5] - CargoSeer specializes in AI software for customs and border operations, utilizing extensive real-world data and advanced algorithms to enhance the speed and security of cargo movement [6]

Core Insights - Leidos is continuing its partnership with Hawai'i's Public Utilities Commission to enhance energy efficiency, reduce carbon emissions, and improve energy resiliency in the state [1][4] Contract Details - A new three-year contract worth $127 million has been established for Leidos to manage the Hawai'i Energy program and the Electric Vehicle Charging Station Rebate program, along with market solutions and educational initiatives [2] Achievements and Impact - Since 2009, Leidos has administered the Hawai'i Energy program, resulting in over $7 billion in energy savings statewide. In the last program year, it provided more than 18,000 rebates totaling approximately $20 million [3] Strategic Alignment - The partnership aligns with Leidos' NorthStar 2030 strategic focus on energy infrastructure and reflects its commitment to advancing energy efficiency and grid modernization across the nation [4] Company Overview - Leidos is a leader in industry and technology, serving government and commercial customers, with annual revenues of approximately $16.7 billion for the fiscal year ending January 3, 2025 [5]

Government Environment - The current environment for companies selling to the government has been described as interesting and somewhat choppy, with unexpected challenges arising throughout the year [1] - The company has demonstrated its agility and central positioning to customer missions while navigating through significant events such as the longest government shutdown in history [1]

Summary of Leidos Conference Call Company Overview - **Company**: Leidos - **Industry**: Government contracting, defense, and technology services Key Points Government Contracting Environment - The current government contracting environment has been challenging, influenced by the longest government shutdown in history and changes in administration priorities [2][3][4] - Despite these challenges, Leidos has shown resilience and has been able to increase guidance multiple times throughout the year, indicating strong earnings and margins [2][3] Funding Dynamics - There has been a strategic reprioritization in federal civilian agencies, impacting funding dynamics, but Leidos remains well-positioned with critical mission priorities [5][6] - The company expects funding dynamics to stabilize as they align with administration growth factors, particularly in defense and border security [5][6] Revenue Growth and Performance - In Q3, Leidos experienced accelerated organic revenue growth and a strong book-to-bill ratio, indicating new wins and programs that will contribute to future growth [7][8] - The company anticipates continued momentum into 2026 and beyond, despite some delays caused by the government shutdown [8][9] Key Growth Areas - **Defense Systems**: A multi-billion dollar segment that is expected to grow significantly due to strong demand signals across various product portfolios [12] - **Cybersecurity**: The cyber growth pillar is anticipated to grow rapidly, driven by evolving threats and advancements in AI [13] - **Energy Infrastructure**: This segment has been growing at a double-digit rate and is expected to become a more significant part of the portfolio due to robust demand signals [14] Health Segment - The health business has been a leading performer in terms of growth and margins, with expectations for modest growth in the near term [15][16] - There are opportunities to extend capabilities into rural and behavioral health, supported by recent funding initiatives [15][16] Competition and Recompete Landscape - Leidos is aware of the ongoing recompete landscape, particularly in the health segment, with contracts up for rebid in 2026 [17][19] - The company is focused on maintaining a competitive edge through performance-based contracts and leveraging technology to enhance service delivery [18][20] Golden Dome Initiative - Leidos is actively participating in the Golden Dome initiative, which is expected to move forward with significant resources allocated by the administration [22][24] - The company is bidding on major contracts related to this initiative and believes it has a critical role to play in various aspects of the program [24][27] FAA Modernization - Leidos has opted not to bid for the prime contractor role in the FAA modernization process but remains a key partner and expects to participate in the Common Automation Platform development [31][34] Margin Expansion - Leidos has achieved industry-leading margins, currently in the high 13% range, with a focus on sustaining these margins while exploring further improvements in specific segments [38][39] - The company is implementing internal efficiencies and leveraging AI to drive margin improvements across its portfolio [42][43] AI Integration - Leidos is committed to integrating AI into its operations to enhance efficiency and service delivery, while also partnering with customers to apply AI to mission outcomes [43][44] Additional Insights - The company is optimistic about its long-term trajectory, particularly in defense and cybersecurity, and is focused on maintaining a competitive edge through innovation and strategic positioning [12][13][14][15][16]

Core Viewpoint - Investors are evaluating Leidos (LDOS) and ExlService Holdings (EXLS) to determine which stock offers better value opportunities in the Computers - IT Services sector [1] Group 1: Zacks Rank and Earnings Outlook - Leidos has a Zacks Rank of 2 (Buy), while ExlService Holdings has a Zacks Rank of 3 (Hold) [3] - LDOS has likely experienced a stronger improvement in its earnings outlook compared to EXLS [3] Group 2: Value Metrics - LDOS has a forward P/E ratio of 16.08, whereas EXLS has a forward P/E of 20.90 [5] - LDOS has a PEG ratio of 1.38, while EXLS has a PEG ratio of 1.50, indicating LDOS's earnings growth is more favorably priced [5] - LDOS's P/B ratio is 4.86 compared to EXLS's P/B of 6.67, suggesting LDOS is more undervalued relative to its book value [6] Group 3: Overall Value Grade - LDOS has a Value grade of B, while EXLS has a Value grade of C, indicating LDOS is viewed as the superior value option based on earnings outlook and valuation metrics [6]

Group 1 - Leidos (LDOS) has returned 30.8% year-to-date, outperforming the Computer and Technology sector average return of 26.6% [4] - Leidos is ranked 2 (Buy) in the Zacks Rank, indicating a positive outlook based on earnings estimates and revisions [3] - The Zacks Consensus Estimate for Leidos' full-year earnings has increased by 2.9% in the past quarter, reflecting improving analyst sentiment [3] Group 2 - Leidos belongs to the Computers - IT Services industry, which has an average year-to-date return of -16.5%, indicating that Leidos is performing significantly better than its industry peers [5] - The Computer and Technology sector is ranked 2 in the Zacks Sector Rank, highlighting its overall strength compared to other sectors [2] - Another stock in the sector, ATN International (ATNI), has also outperformed the sector with a year-to-date return of 27.3% [4]

Core Insights - Leidos' B220-HT explosive trace detection (ETD) system has achieved G1 Standard certification, ahead of the European Civil Aviation Conference's regulatory mandate for ETD systems in the EU [1][2] - The certification ensures compliance with stricter detection requirements that will be enforced starting late 2026, positioning Leidos to support existing customers without disruption [1][2] Company Overview - Leidos is a leader in the industry, providing advanced security screening and aviation solutions, with a reported annual revenue of approximately $16.7 billion for the fiscal year ending January 3, 2025 [4] - The company employs around 47,000 people globally and is headquartered in Reston, Virginia [4] Product Details - The B220-HT system utilizes advanced analysis technology for rapid detection of a wide range of explosives and narcotics, making it suitable for high-throughput airport environments [2] - Over 750 B220-HT units are currently in use at European airports, indicating a significant market presence [1]

Core Viewpoint - Leidos (LDOS) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for predicting near-term stock price movements [2][3]. - A strong correlation exists between earnings estimate revisions and stock price movements, with institutional investors using these estimates to determine fair value [3]. Leidos' Earnings Outlook - The recent upgrade for Leidos indicates an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - For the fiscal year ending December 2025, Leidos is projected to earn $11.72 per share, with a 2.9% increase in the Zacks Consensus Estimate over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [6]. - The upgrade of Leidos to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].