Leidos initiated with a Neutral at UBS

UBS initiated coverage of Leidos (LDOS) with a Neutral rating and $182 price target as the firm initiates coverage on on Government IT & Services stocks. Government austerity is not the firm’s base-case scenario in the current environment of elevated global geopolitical tension and rapid technological advancement, and the 20% de-rating in stocks since the election may ultimately prove overdone, but UBS sees more headline risk than re- rate potential over the next year and as a result, believes it is too early to broadly buy the selloff, the analyst tells investors in a research note. UBS says comps are difficult and Leidos has already indicated slower 2025 growth, and above average FedCiv exposure could weigh on valuation until government efficiency initiatives are more clearly outlined.