- RBC capital Analyst Ken Herbert reiterated a sector perform rating on shares of Leidos Holdings Inc LDOS and raised the target price to $112.00 from $105.00.
- The Company’s Dynetics facility in Alabama is a key component of the Company’s product portfolio and accounts for approximately 10% of the Company’s total sales.
- The analyst believes Dynetics is well positioned in emerging defense markets and should support revenue growth at the high end of the company’s 5% to 6% growth outlook for 2022-2024.
- Leidos has secured many hypersonic contracts and has major air defense programs including IFPC, IFPC High Energy Laser, MuDRaCE, and MFP.
- Herbert currently forecasts growth of approximately 5% for the Defense Solutions segment in 2023-2024.
- Management reiterated its strategic justification for acquiring Dynetics, highlighting $1.6 billion in business the company won as a result of adding Dynetics to the portfolio.
- In terms of market segment, the company raised its growth prospects the most for its tactical weapons, hypersonic systems and air autonomy.
- Leidos highlighted macroeconomic defense factors as tailwinds for the growth of its Dynetics business, including a greater focus on China, a greater focus on defense modernization efforts, and a growing emphasis on rapid, innovative solutions.
- also read: Leidos posted 4% revenue growth in Q3, supported by its defense, civil and healthcare segments
- Price promotion: LDOS shares are trading up 0.75% at $110.44 on the last check Friday.
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