Credit Suisse Upgrades Leidos Holdings (LDOS) to Outperform
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Credit Suisse upgraded Leidos Holdings (NYSE: LDOS) from Neutral to Outperform with a price target of $57.00 (from $40.49).
Analyst Robert Spingarn commented, "Government services names began to gain traction over a year ago as the market correctly anticipated the inflection to positive organic growth that is finally occurring now. The recent run in defense names before the election (as defensive vehicles) and since the Trump victory (as offensive vehicles) has continued to re-rate the group upward. And while the favorable tide can continue to lift all names in the group, we see relative upside for LDOS from the additional levers enabled by the IS&GS acquisition, from cost synergies, deleveraging, and potentially from revenue synergies. For investors with a longer-term view, much of the above falls into place in 2019. We apply an EV/EBITDA valuation methodology to our 2019 estimates, and discount back to arrive at our new 12-month TP of $57."
The firm's 2016/'17/'18 estimates adjust to $3.59/$3.24/$3.57. We also introduce 2019 to capture the synergy benefit that is a key driver behind the IS&GS acquisition.
Shares of Leidos Holdings closed at $48.36 yesterday.
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