Leidos Holdings Surges 6.97% on Earnings Beat and Bold Guidance Hike—What’s Fueling This Rally?

Summary
• Leidos (LDOS) surges 6.97% intraday to $172.18, breaking above its 52-week high of $202.90
• Q2 results smash estimates: $3.21/share non-GAAP EPS (up 22% YoY), $4.25B revenue (up 3% YoY)
• Guidance raised: FY25 revenue now $17.0B–$17.25B; non-GAAP EPS $11.15–$11.45
• $291M acquisition of Kudu Dynamics accelerates AI-driven cyber capabilities for defense clients
Leidos Holdings has ignited a sharp intraday rally, driven by a blockbuster Q2 earnings report and aggressive full-year guidance. With revenues and margins outpacing expectations, the stock’s 6.97% surge reflects investor confidence in its NorthStar 2030 strategy and strategic acquisitions. The move underscores Leidos’ dominance in defense tech amid a $1.3B classified award and a $350M Air Force contract.

Earnings Surge and Strategic Acquisitions Ignite Leidos’ Rally
Leidos’ 6.97% intraday jump stems from a combination of record Q2 results and a bold guidance revision. The company reported $4.25B in revenue (up 3% YoY) and $3.21/share non-GAAP EPS (up 22% YoY), driven by strong demand in defense systems and a $25M insurance reimbursement. The acquisition of Kudu Dynamics, a $291M AI-focused cyber firm, aligns with its NorthStar 2030 strategy, accelerating growth in high-margin defense contracts. Additionally, a $1.3B classified Intelligence Community award and a $350M Air Force electronic warfare contract signal sustained demand. The raised FY25 guidance—$17.0B–$17.25B revenue and $11.15–$11.45 non-GAAP EPS—further validates investor optimism.

Defense Sector Rally: Leidos Outpaces Lockheed Martin’s 1.14% Gains
The Aerospace & Defense sector has seen mixed momentum, with Leidos outperforming peers like Lockheed Martin (LMT), which rose 1.14% on Tuesday. Leidos’ rally is uniquely tied to its Q2 earnings beat and strategic acquisitions, whereas broader sector gains reflect macroeconomic optimism. The company’s focus on AI-enabled cyber solutions and classified contracts positions it to capitalize on defense budget increases, contrasting with LMT’s more diversified but slower-moving defense portfolio.

Options Playbook: High-Leverage Calls for Aggressive Bulls
• 200-day MA: $152.07 (below current price); RSI: 52.25 (neutral); MACD: 1.12 (bullish divergence)
• Bollinger Bands: Price at $172.18 (above upper band of $164.43), signaling overbought conditions
• Key support/resistance: 30D range $160.95–$161.23; 200D range $159.63–$161.12
• Leidos’ 6.97% rally has created a short-term overbought RSI (52.25) and a bullish MACD crossover. While the 52-week high at $202.90 remains distant, the stock’s momentum suggests a continuation above $170. Traders should monitor the 200-day MA ($152.07) as a critical support level. The absence of a leveraged ETF complicates direct sector exposure, but options offer tailored leverage.
Top Option 1: LDOS20250815C170 (Call)
• Code: LDOS20250815C170
• Strike: $170; Expiry: 2025-08-15
• IV: 27.09% (moderate); Delta: 0.633 (moderate sensitivity); Theta: -0.440 (high time decay); Gamma: 0.046 (high sensitivity to price moves); Turnover: 25,534
• Payoff at 5% upside ($180.78): $10.78/share
• This call offers a 37.07% leverage ratio and high gamma, ideal for capitalizing on a breakout above $170. The moderate IV and high turnover ensure liquidity.
Top Option 2: LDOS20250815C175 (Call)
• Code: LDOS20250815C175
• Strike: $175; Expiry: 2025-08-15
• IV: 25.50% (moderate); Delta: 0.384 (moderate sensitivity); Theta: -0.318 (high time decay); Gamma: 0.050 (high sensitivity); Turnover: 34,046
• Payoff at 5% upside ($180.78): $5.78/share
• This contract’s 86.20% leverage ratio and high gamma make it a top pick for a mid-term rally. The moderate IV and high turnover ensure tradability. Aggressive bulls should consider LDOS20250815C170 into a break above $170.

Backtest Leidos Holdings Stock Performance
The backtest of LDOS's performance following a 7% intraday increase shows promising results, with a strategy return of 71.81% outperforming the benchmark by a significant margin. The Sharpe ratio of 0.44 and a maximum drawdown of 0% indicate a strong risk-adjusted return and minimal downside risk.

Leidos’ Rally Gains Steam—Act Now on High-Leverage Calls
Leidos’ 6.97% surge is a testament to its Q2 outperformance and strategic momentum. With a raised FY25 guidance and a robust order book ($46.2B backlog), the stock is positioned to test its 52-week high. Traders should prioritize the LDOS20250815C170 call for a breakout above $170 or the LDOS20250815C175 for a mid-term rally. Watch for a breakdown below the 200-day MA ($152.07) as a bearish signal. Meanwhile, sector leader Lockheed Martin (LMT) rising 1.14% highlights the sector’s resilience. For aggressive bulls, the 37.07% leverage ratio on the $170 call offers a compelling entry.