The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired Leidos Holdings, Inc. (“Leidos” or the “Company”) (NYSE: LDOS) securities between May 4, 2020 and February 23, 2021, inclusive (the “Class Period”). Leidos investors have until May 3, 2021 to file a lead plaintiff motion.
If you are a shareholder who suffered a loss, click here to participate.
On February 16, 2021, Spruce Point Capital Management LLC (“Spruce Point”) published a research report, alleging, among other things that “Leidos is potentially covering up at least $100m of fictitious sales, mischaracterizing $355 - $367m of international revenue.” The report also alleged that the Company was “concealing numerous product defects from investors, notably faulty explosive detection systems at airports and borders.”
On this news, the Company’s share price fell $2.58, or 2.4%, to close at $105.22 per share on February 16, 2021, on unusually heavy trading volume.
On February 23, 2021, Leidos announced its fourth quarter and full year 2020 financial results in a press release. Therein, the Company reported $89 million revenue related to the SD&A businesses for the fourth quarter, meaning that after two full quarters, the acquisition generated only $163 million in sales (or $326 million annualized), falling well short of projected $500 million sales. The Company expected cash flow of $850 million, well below analyst estimates of $1.083 billion.
On this news, the Company’s stock price fell $10.29, or 9.91%, to close at $93.51 per share on February 23, 2021.
On February 24, 2021, Spruce Point highlighted that Leidos had “materially expanded” the risk disclosures in its annual report for the year ended December 31, 2020. Spruce Point tweeted: “We believe it is validating all the major points of our report.”
On this news, the Company’s stock price fell $3.13, or 3.3%, to close at $90.38 per share on February 24, 2021, on unusually heavy trading volume.
Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the purported benefits of the Company’s acquisition of L3Harris’ Security Detection & Automation businesses were significantly overstated; (2) that Leidos’ products suffered from numerous product defects, including faulty explosive detection systems at airports, ports, and borders; (3) that, as a result of the foregoing, the Company’s financial results were significantly overstated; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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If you purchased Leidos securities during the Class Period, you may move the Court no later than May 3, 2021 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Leidos securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to email@example.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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