The analyst mentions that as the leading government service firm, LDOS is well positioned to benefit from expanding opportunities and margin stability as programs mature and as the Dynetics business accelerates into 2023-2024.
In Herbert's opinion, the defense product and M&A strategy need to be more clearly defined for the benefit of investors.
The analyst states that greater buyback activity would accelerate earnings growth, but he expects management to prioritize continued M&A investments.
LDOS is currently trading at a ~10% discount to its government services peers on a P/E basis.
Price Action: LDOS shares are trading lower by 1.35% at $95.91 on the last check Tuesday.
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