What Happened?
Shares of defense contractor Leidos (NYSE: LDOS) fell 5.6% in the morning session after Jefferies downgraded the stock to 'Hold' from 'Buy'.
Jefferies lowered its price target to $140 from $185, expressing concern that the company's profit margins could be difficult to maintain due to uncertainty around U.S. defense spending. The negative sentiment follows earlier news that the Defense Health Agency (DHA) plans to move away from using Leidos as the lead systems integrator for its electronic health record system. Leidos had been the integrator for the project since 2015.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Leidos? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Leidos’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 6.2% as positive news from a peer company sparked a rally across the defense technology sector, with an analyst price target increase providing further support.
The interest in defense and government IT stocks grew after competitor Parsons announced a new $392 million federal contract. This news pulled investor attention toward the sector, leading traders to invest in established names. Leidos, viewed as a barometer for the federal IT space, benefited from this shift in focus. Adding to the positive sentiment, Argus raised its price target on Leidos to $225 from $210 and maintained its Buy rating on the stock.
Leidos is down 37% since the beginning of the year, and at $115.50 per share, it is trading 42.1% below its 52-week high of $199.55 from November 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Leidos’s shares 5 years ago would now be looking at an investment worth $1,078.
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