Leonardo DRS downgraded to Neutral at BofA on valuation

As previously reported, BofA analyst Ronald Epstein downgraded Leonardo DRS to Neutral from Buy with a price target of $30, up from $26. While Leonardo DRS outperformed expectations in Q2, the firm sees stronger opportunities in the market to capture near-term tailwinds associated with more robust global defense spending and more specifically “stronger Navy-centric plays.” While the firm appreciates that Leonardo DRS cleared a majority of its recompete risk by having secured a win on its largest recompete for the year and grew total backlog 82% year-over-year in the quarter, it thinks upside is already reflected in the current valuation.