# J.P. Morgan Downgrades Leidos Holdings to Neutral Ahead of Q3 Earnings

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/28454
Published: 2026-10-08T19:27:19.000Z
Updated: 2026-10-08T19:27:19.000Z
Section: Investing

> Weaker earnings expectations, pressure in its health business and uncertainty over U.S. military spending weigh on the outlook.

J.P. Morgan downgraded Leidos Holdings, Inc. to Neutral as aerospace and defense companies approach a difficult third-quarter earnings season, with weaker profit expectations weighing on the company’s outlook.

The downgrade reflects pressure in Leidos’ health business, concerns that consensus forecasts are too optimistic and uncertainty over U.S. military spending. The company’s low valuation has not offset those risks.

The broader aerospace and defense sector has also weakened in the stock market even as the wider market has held up better. Slowing airline traffic growth and continuing supply-chain constraints are adding pressure ahead of quarterly results.

Defense-spending uncertainty is a key concern for companies exposed to government contracts. The sector’s earnings outlook will depend in part on whether demand remains strong enough to support estimates through the quarter.

J.P. Morgan continues to favor Howmet Aerospace, Honeywell Aerospace, Huntington Ingalls and Lockheed Martin. Those companies offer a combination of underlying demand, potential earnings upgrades and rebound potential.

The next major test for Leidos and its peers will come with third-quarter earnings updates, as investors assess whether current forecasts reflect the pressure facing the sector.