Leidos Holdings, Inc. has been recognized as one of the best investments in 2026, despite recent analyst adjustments to its price target. The defense and technology contractor has secured the tenth position on a prominent investment list, highlighting its strategic position in government IT services and defense technology markets.
According to TheFly, RBC Capital revised its outlook for Leidos stock on February 18, lowering the price target from $230 to $215 while maintaining an Outperform rating. The adjustment follows mixed fourth-quarter results that reflected challenges in the Veterans Benefits Administration activity, which created headwinds for the company’s service-focused operations.
Leidos Stock Faces Valuation Pressures Amid Business Transformation
The analyst firm noted that Leidos Holdings continues to be valued primarily as a service-focused company, even as it pursues a strategic shift toward higher-growth defense technology markets. RBC Capital viewed the company’s reallocation of capital into defense technology positively, recognizing the long-term potential of this transition. However, the firm acknowledged that market perception still reflects the company’s traditional service business model.
The fourth-quarter performance revealed the ongoing challenges associated with government contract fluctuations. The slowdown in VBA activity underscored the volatility inherent in government services contracting, which remains a significant portion of the company’s revenue base.
Reagan National Airport Digital System Demonstrates Technology Capabilities
Meanwhile, Leidos announced on February 19 the successful implementation of a new digital system at Reagan National Airport designed to enhance aircraft safety and operational efficiency. The technology, developed for the FAA’s Terminal Flight Data Manager program, replaces conventional paper flight strips with real-time digital data and predictive modeling tools that help air traffic controllers optimize aircraft movements on the ground.
Additionally, the deployment at Reagan National was completed 45 percent faster than the typical 18-month timeline, demonstrating the company’s execution capabilities in complex technology projects. The system provides an integrated view for controllers, air traffic managers, and airline operations, aiming to reduce delays and improve safety at one of the nation’s busiest airports.
Defense Technology Investments Position Company for Growth
Leidos Holdings provides IT, engineering, and defense solutions globally, including cybersecurity, systems integration, and mission support services for government and commercial clients. The company’s diverse portfolio spans critical infrastructure, national security, and health sectors, positioning it to benefit from sustained government spending on modernization and defense initiatives.
In contrast to traditional service contracts, the company’s investments in defense technology and digital transformation solutions offer higher growth potential. The shift aligns with broader trends in government procurement, where agencies increasingly prioritize advanced technology capabilities over conventional service arrangements.
However, the transition from a service-focused business model to a technology-driven one requires sustained capital investment and may take time to materially impact investor perceptions. Market analysts continue to evaluate whether the company can successfully balance its established government services business with emerging high-growth technology opportunities.
Investors will likely monitor upcoming quarterly results to assess whether Leidos can accelerate revenue growth from its defense technology investments while managing the headwinds in its traditional service segments. The company has not announced specific timelines for when its technology-focused initiatives will represent a larger proportion of overall revenue.
