Goldman analyst Noah Poponak upgraded Leidos to Buy and increased its price target to $68 from $61 saying he expects large programs to accelerate in 2018, combined with IS&GS merger synergies, and a reversal in working capital that should drive free cash above investor expectations.

Leidos was recently awarded a follow-on prime contract to provide the U.S. Army with technology-enabled services, including hardware sustainment, modernization, refresher training, and logistics support. The Responsive Strategic Sourcing for Services, indefinite delivery/indefinite quantity task order, has a base period of 11 months, and a maximum value of $267M, if all four one-year options are exercised. Under the task order, Leidos experts in Command, Control, Communication, Computers, Cyber, Intelligence, Surveillance, & Reconnaissance will assess Army hardware capabilities against performance parameters, build out hardware configurations, and implement upgrades. Leidos will also help to coordinate equipment warehousing, shipping, and warranty repair.