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Leidos Secures $445M Deal to Offer IT Services to Air Force

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Leidos Holdings, Inc. (LDOS - Free Report) recently secured a contract worth $445.4 million for providing a full range of classified and unclassified information technology services to the Air Force in the National Capital Region. The contract was awarded by the Air Force, District of Washington Contracting, Joint Base Andrews, MD.

Work related to the deal will be performed in National Capital Region to include Joint Base Andrews, Joint Base Anacostia-Bolling and the Pentagon, which is expected to be concluded by Sep 2, 2024.

Rising Demand for IT Services in Aerospace-Defense

Over the last few years, demand for complex information technology services in the Aerospace market has witnessed a significant rise. A major reason behind the demand growth is escalation in the frequency of cyber threats recently and the emergence of disruptive digital technologies, among others.

The growing demand for IT services has also risen from the Air Force’s increasing requirement of IT program management services, cybersecurity programs, machine learning, AI, enterprise IT operations and systems planning services. Furthermore, the global acceptance for cloud software solutions have been fueling IT services growth from companies across the Aerospace-Defense industry.

What Favors Leidos?

The aforementioned demand trends have proved to be crucial for Leidos’ success within the Aerospace-Defense Market. Consequently, increased contract wins for its cost-effective defense solutions from the Pentagon and other U.S. allies have been acting as primary catalysts, which in turn will bolster revenues. Evidently, at the end of second quarter 2019, Leidos Holdings’ revenues at the defense solutions segment stood at $1,346 million, reflecting year-over-year growth of 6.7%.

Interestingly, the approved fiscal 2020 defense budget provisions for a total spending plan of $9.6 billion for improving IT and cybersecurity capabilities. Leidos, being a prominent provider of information technology services and solutions in the defense, intelligence, civil and health markets, will significantly benefit from this budgetary provision.

Price Movement    

Leidos Holdings’ stock has gained 29.7% in the last one year, compared with the industry’s growth of 10.2%.

Zacks Rank & Stocks to Consider

Leidos Holding currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Wesco Aircraft Holdings , Safran SA (SAFRY - Free Report) and General Dynamics Corp. (GD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 1.2% to 85 cents in the past 60 days.

General Dynamics’ long-term growth estimates currently stand at 8.7%. The Zacks Consensus Estimate for 2019 earnings has risen 0.93% to $11.88 in the past 60 days.

Safran SA’s Zacks Consensus Estimate for 2019 earnings has risen 3.84% to $1.62 in the past 60 days. Its year-over-year growth estimate for 2019 currently stands at 20.9%.

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