Leidos' (LDOS) healthcare business sees limited future upside from increasing competition, BofA Securities said in a Wednesday note.
BofA said it sees near-term pressure on the healthcare business as the U.S. Defense Health Agency seeks to work directly with suppliers in the Defense Health Management System Modernization program's maintenance phase.
It also said the upcoming Medical Disability Examinations recompete could weigh on Leidos' future share and pricing power.
The investment banking firm said it continues to recognize the value of Leidos' defense portfolio, but added that it does not believe investors will give credit for full value of the opportunities until the results begin to materialize.
BofA downgraded Leidos to neutral from buy and adjusted its price target to $125 from $200.
Price: $110.13, Change: $-3.45, Percent Change: -3.04%