RBC upgrades Leidos, says defense segment is underappreciated

Brokerage RBC upgrades government contractor Leidos LDOS.N to "outperform" from "sector perform", lifts PT to $210 - a 18% upside from last close of $177.71

Stock slips 0.9% to $176 in choppy premarket trading

Brokerage says that rating upgrade is due to strength in its health services and defense segments and increased confidence in senior management's capital management

Co's strong contract execution on servicing the increased medical exam volumes for veterans is better than investors expected and RBC expects funding for this effort to stay elevated into an election year

On the defense side, co's position in hypersonics, unmanned vehicles and artificial intelligence are noteworthy - RBC

Brokerage says Leidos' defense portfolio may be underappreciated and believes the strong outlook for the segment, including plans for the Golden Dome, can boost the stock

RBC says co's smaller and incremental acquisitions, including that of Kudu Dynamics has potential for greater capital return to shareholders

11 out of 18 brokerages have a rating of 'buy' or higher and 7 'hold', according to data compiled by LSEG

Up to last close, stock has jumped 23% this year