Leidos Holdings Inc. (LDOS) raised its full-year organic-growth outlook at the Jefferies Global Industrials Conference 2026, projecting about 8% organic growth in the second half of 2024 — well above the 5% achieved in the first half and the 4% pace recorded in the second quarter.
The update came as the defense and technology contractor reinforced a multi-segment growth strategy led by what Chief Financial Officer Chris Cage called "five key growth pillars": defense tech, energy infrastructure, cyber, mission and digital services, and managed health services.
Defense revenue contributed $3.6 billion, representing 22% of total sales, with quarterly growth of 6% and a book-to-bill ratio of 2.2x. The Integrated Fixed Tower Platform (IFPC) program, part of the broader Integrated Air Defense effort, is currently producing four units per month and is expected to double to approximately eight units monthly by year-end 2024, supported by a $4 billion indefinite-delivery, indefinite-quantity vehicle. Leidos also secured an $869 million Army MACRO 2 contract providing access to command-and-control and C5ISR work.
In the Navy unmanned-systems space, Leidos is among seven invitees competing for a potential procurement of up to 30 medium-sized unmanned surface vessels, while a low-cost containerized munitions framework agreement could exceed $1 billion.
The homeland and FAA segment accounted for 21% of sales, with revenue rising 32%, of which 15% was organic. Leidos remains a finalist in a multi-billion-dollar software effort for the FAA's Common Automation Platform, part of a broader $12 billion modernization program that also includes work on the Federal Automation Platform, ERAM, and TFDM systems.
In health services, revenue was approximately $2 billion. However, second-half 2024 health margins are expected to come in at about 20%, down roughly 200 basis points from the first half, due to the suspension of incentive payments through the end of 2024. The Veterans Benefits Administration program remains a focal point: Leidos operates across all six VBA regions, handling an estimated 40% of program volume through six regional contracts shared among four vendors. Annual medical-disability exam volume stands at about 2.8 million. In August, claims volume rose 6% while total claims completed fell 1%, and an RFP is expected in October 2024.
Leidos is also negotiating a one-year extension for the MHS GENESIS sustainment and operations-support contract. If the Department of Defense were to procure software licenses directly from providers such as Oracle or Philips rather than through Leidos, annual revenue could decline by $100 million to $150 million.
On the energy-infrastructure side, the $2.4 billion ENTRUST acquisition, which closed roughly five months ago, expanded Leidos' addressable energy-infrastructure market by approximately three times. Back-office system integration is targeted for completion by year-end 2024, and proprietary software tools are being used to reduce manpower needs by about 30%.
Capital expenditures guidance was cut to $250 million for 2024, down from a prior level of $350 million, though still above prior-year spending.
Cage acknowledged near-term pressures in health but pointed to offsetting strength elsewhere. "The power of the portfolio... we signaled a couple headwinds in the health business that were outside of our control," Cage said. "But we were able to raise guidance through all of that because of the strengths of other parts of the portfolio." On the VBA program, he added: "I'd characterize it as the most successful program that we have. The team has done an outstanding job being a critical provider to the VA, done everything we've asked them to do, and the result of that has been a very well-run program that's delivered exceptional profitability."
At the time of the conference, Leidos shares were trading around $128.86, with a P/E ratio of 12.12, a dividend yield of 1.33%, and a market capitalization of $16.17 billion. The company has raised its dividend for seven consecutive years.
