Leidos Hld (LDOS) Stock Forecast & Price Target

Leidos Holdings is viewed positively because its 1Q26 results beat expectations, with adj. EPS of $3.13 on revenues of $4.4B, up 4% YoY and supported by the closing of the ~$2.4B Entrust acquisition, which also lifted 2026 guidance by $500M at the midpoint. Its outlook is underpinned by strong Health segment execution, growing veterans exam volumes, a defense portfolio exposed to air defense, hypersonics, and unmanned ships, and backlog visibility that rose with total and funded backlogs up 4% and 31% from Entrust, plus $9B in defense tech awards over the last 15 months. While 2026 margins are expected to step down from 14.1% in 2025 to mid-13%, management still sees revenue growth of ~6%, and the recent 0.8x book-to-bill, alongside expected acceleration later in the year, supports the case for recovery.

Leidos Holdings is exposed to heavy dependence on annual U.S. government and defense funding, making its revenue and margin profile vulnerable to shifting political priorities, congressional appropriations, and agency budgets such as the VA and DoD. Even with 1Q26 adjusted EBITDA margin at 14.0% and adjusted EPS of $3.13, operating income declined in Health, Homeland, and Defense, with Defense hit by a scheduled delay on a fixed-price development program. Although the Entrust acquisition added $500 million to sales and $0.05 to adjusted EPS, the base business was not improved, and the company still faces execution, hiring, cyber, supply chain, and sustainability pressures.