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Leidos Holdings (LDOS) Inks $82M Contract to Support UAS

Zacks Equity Research
·3-min read

Leidos Holdings, Inc.LDOS recently clinched a deal to provide support services involving the counter-small unmanned aerial system (C-sUAS). The contract has been awarded by the U.S. Air Force.

Details of the Deal

As part of the deal, Leidos will support the Air Force Life Cycle Management Center and bolster the air base defender's ability to detect, identify, track and defeat sUAS.

Valued at $82 million, this contract will entail Leidos performing a wide range of system and software maintenance. Through this contract, the U.S. Air Force intends to enhance their base security capabilities, which will enable it to face any threats to the airbase, utilizing Leidos' innovation and agile technologies.

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The order involves a one-year period and four one-year options.

UAS & Leidos

Unmanned Aerial System has been rapidly gaining importance owing to its feature of being operated remotely using a radio data link and its cost-effectiveness. It aids the army in carrying out missions in higher-risk environments more safely and efficiently. Such autonomous features have urged the defense system to include UAS in their fleet. This, in turn, has boosted the demand for UAS’ and bolstered the growth prospects of companies like Leidos that offer autonomous solutions.

Leidos supports autonomous systems in the areas of unmanned aerial systems, surface ships, undersea vehicles and ground vehicles as well as autonomy software and hardware for autonomous vehicles and platforms. These capabilities have surely helped the company in securing the latest contract.

Growth Prospects

According to a report from Fortune Business Insights, the military segment of the global unmanned aerial vehicle (UAV) market is projected to witness a CAGR of 12.78% over the period of 2021-2028. This presents ample growth opportunities for defense majors involved in the UAV segment like Leidos, Kratos Defense & Security Solutions KTOS, Northrop Grumman NOC and Boeing BA.

Kratos is the primary unmanned aerial target drone system provider to the U.S. Air Force, Navy, Army and numerous allied foreign defense agencies. In November 2021, Kratos was awarded a $4.1-million contract from an international customer for delivering high-performance, unmanned aerial target drone system aircraft and related services.

Impressively, Kratos’ third-quarter 2021 adjusted earnings of 9 cents per share surpassed the Zacks Consensus Estimate by 28.6%. Its Zacks Consensus Estimate for fourth-quarter earnings indicates an improvement of 12.5% over the prior-year quarter.

Northrop Grumman’s MQ-4C Triton UAS is equipped to provide real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions. The system is integrated with a robust mission sensor suite that provides 360-degree coverage on all sensors, ensuring unprecedented maritime domain awareness of the U.S. Navy.

Northrop Grumman has a long-term earnings growth rate of 8.98%. Shares of Northrop Grumman have gained 4.9% in the last one year.

Boeing’s MQ-25 unmanned aircraft system is designed for the U.S. Navy mission that provides the needed robust refueling capability, thereby extending the combat range of deployed Boeing F/A-18 Super Hornet, Boeing EA-18G Growler, and Lockheed Martin F-35C fighters.

Boeing’s Zacks Consensus Estimate for fourth-quarter earnings indicates a whopping 100.4% improvement over the prior-year quarter. Its long-term earnings growth rate is pegged at 4%.

Price Movement

In the past one year, shares of Leidos have lost 16%, compared with the industry’s decline of 33.5%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

Leidos currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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The Boeing Company (BA) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Kratos Defense & Security Solutions, Inc. (KTOS) : Free Stock Analysis Report

Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report

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