Robert W. Baird has moved Leidos Holdings from Outperform to Neutral, revising its price target to $163. This downgrade stems from increasing uncertainty in government contracting and weakening momentum in new bookings.
Why the Downgrade
🔹 The company reported a bookings-to-bill ratio of 0.5x in Q1, signaling pressure in securing fresh contract work.
🔹 Major contract terminations in Q2, especially in IDIQ awards, have thinned Leidos’ shadow backlog.
🔹 Reduced funding from the National Institutes of Health adds another layer of risk, especially in health-focused segments.
Dividend Fundamentals
🔹 Forward Dividend Yield: Around 1.02%, modest but stable
🔹 Payout Ratio: Approximately 14.29%, reflecting a conservative capital return strategy
🔹 Dividend Growth: Leidos has raised its dividend consistently for 9 years
🔹 Next Dividend: $0.40 per share, payable June 30, 2025
While Leidos maintains financial strength and steady dividend growth, recent turbulence in contract flow and budgetary cutbacks have cooled investor sentiment.