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Long Trade Idea
Enter your long position between $121.53 (the lower band of its horizontal support level) and $127.44 (the intra-day high of its last bullish candlestick).
Market Index Analysis
Leidos Holdings (NYSE:LDOS) is a member of the S&P 500 Index.
This index remains near all-time highs, driven by the AI bubble, while inflation and borrowing costs are rising.
The Bull Bear Power Indicator for the S&P 500 Index is bullish with a negative divergence.
Market Sentiment Analysis
Equity futures are drifting lower this morning after NVIDIA’s earnings and upbeat outlook failed to impress investors. SpaceX filed its S-1 registration statement with the SEC, bringing it one step closer to its IPO, expected to be the largest ever. Oil advanced following yesterday’s drop below $100 per barrel, while earnings from Walmart, Ross Stores, Workday, and Zoom Communications highlight today’s session.
Leidos Holdings Fundamental Analysis
Leidos Holdings (LDOS) is a defense, aviation, information technology, and biomedical research company. LDOS is the largest government IT company and has contracts with the Department of Defense, the Department of Homeland Security, the Intelligence Community, and select commercial markets.
So, why am I bullish on LDOS despite its post-earnings slide?
Leidos Holdings beat revenue and earnings-per-share expectations of $4.28 billion and $2.90, reporting $4.40 billion and $3.13, respectively, while also raising its full-year guidance. I remain bullish, driven by significant contract wins, including a $2.7 billion U.S. Army hypersonics contract, a $1.1 billion Navy digital engineering contract, and a $869 million AI-enabled MACRO II systems contract. Strategic acquisitions, like the $2.3 billion Entrust acquisition and its near-term $69 billion pipeline, add to my bullish view.
Metric | Value | Verdict |
P/E Ratio | 11.38 | Bullish |
P/B Ratio | 3.16 | Bearish |
PEG Ratio | 5.93 | Bearish |
Current Ratio | 1.40 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Leidos Holdings Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 11.38 makes LDOS an inexpensive stock. By comparison, the P/E ratio for the S&P 500 Index is 31.99.
The average analyst price target for LDOS is $187.79. This suggests excellent upside potential with fading downside risk.
Leidos Holdings Technical Analysis
Today’s LDOS Signal
The LDOS D1 chart shows price action inside a horizontal support zone.
It also shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator is bearish with a positive divergence.
The average bullish trading volumes are higher than the average bearish trading volumes over the past week.
LDOS flatlined as the S&P 500 Index descended, a bullish confirmation.
My LDOS Long Stock Trade
LDOS Entry Level: Between $121.53 and $127.44
LDOS Take Profit: Between $153.90 and $159.04
LDOS Stop Loss: Between $105.52 and $108.97
Risk/Reward Ratio: 2.02
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