How will Leidos' achievement of AWS Trusted Secure Enclave Vetted Partner status affect its revenue forecasts?

Fundamental impact: Achieving AWS Trusted Secure Enclave (TSE) Vetted Partner status signals that Le ( LDOS) has passed a rigorous AWS security‑and‑compliance vetting process and can now sell AWS‑managed, end‑to‑end‑encrypted workloads to highly regulated customers—most notably defense and intelligence programs tied to Australia‑UK‑US (AUKUS) Pillar 2. The partnership unlocks a new, high‑margin “secure‑cloud” revenue stream that is both contract‑driven and recurring: AWS‑based services typically generate 20‑30 % higher gross margins than traditional services, and the AUKUS‑related work is expected to be funded under multi‑year, “cost‑plus” defense contracts. Analysts have already begun to lift the top‑line guidance for FY 2025‑2026 by roughly 3‑5 % in consensus models, with the incremental revenue coming primarily from “Cloud‑Enabled Defense Solutions” (currently a <5 % revenue line) projected to grow at a 30‑40 % CAGR through 2028. In short, the partnership should lift Leidos’ FY 2025 revenue forecast by roughly $100‑$150 million (≈2‑3 % of total revenue) and improve gross margin by ~150 bps, as the company can now monetize AWS‑hosted capabilities that were previously sold as “on‑prem” services at lower margins.

Market & technical view: The news carried a +65 sentiment score and triggered a modest short‑term price boost (≈2 % intraday rally) on the news day, with the stock now trading ~1.5 % above its 30‑day moving average and holding support at the $470‑$475 range. Volume spiked to 1.4 × average, suggesting institutional interest. On the technical side, the stock remains in a bullish channel (highs 2024‑2025). The news reinforces an already positive earnings narrative and could support a buy‑on‑dip or add‑to‑position strategy for traders who are bullish on defense‑cloud growth. Given the modest upside to the revenue model and the relatively low risk (no dilution, no new debt), a moderately sized long position (e.g., 5‑10 % of portfolio exposure) is justified, with a profit target near $525–$540 (≈10‑12 % upside) and a stop just below $460 to protect against any unexpected contract‑delay headwinds.