SAN FRANCISCO, March 5, 2021 /PRNewswire/ -- Hagens Berman urges Leidos Holdings, Inc. (NYSE: LDOS) investors to submit their losses now. A securities fraud class action has been filed and certain investors may have valuable claims.
Leidos Holdings, Inc. (LDOS) Securities Fraud Class Action:
The complaint centers on the accuracy of defendants' statements about Leidos' SD&A business, which the company acquired from L3Harris Technologies in May 2020 for $1 billion and touted as having compelling strategic and operational benefits.
Specifically, defendants materially overstated the benefits of the acquisition and did not disclose that Leidos' products suffered from numerous product defects that included faulty explosive detection systems at airports, ports and borders. As a result, the company's financial results were significantly overstated.
The truth emerged through a series of partial disclosures beginning on Feb. 16, 2021 when analyst Spruce Point published a scathing report concluding that Leidos had "wasted" $1b on the SD&A acquisition. Spruce Point stated, "We believe Leidos is potentially covering up at least $100m of fictitious sales, mischaracterizing $355 - $367m of international revenue." Spruce Point also alleged that the company is "concealing numerous product defects from investors, notably faulty explosive detection systems at airports and borders." Spruce Point further avers that management may be intentionally inflating certain of Leidos' financial metrics, including operating cash flow and organic sales growth, to obscure strains from investors.
Then, on Feb. 23, 2021, Leidos released mixed Q4 2020 financial results and disappointing 2021 outlook, including guided revenue and EPS well below analyst consensus. The same day, Spruce Point highlighted the poor 2021 outlook and picked up on a SD&A accounting discrepancy, tweeting "[t]his asset is a total black box."
Finally, on Feb. 24, 2021Spruce Point highlighted that Leidos "materially expanded" its risk disclosures in its 2020 annual report, tweeting "[w]e believe it is validating all the major points of our report."
On these disclosures, the price of Leidos shares sharply declined.
"We're focused on investor losses and proving Leidos misled investors about its SD&A business," said Reed Kathrein, the Hagens Berman partner leading the investigation.
Whistleblowers: Persons with non-public information regarding Leidos should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].
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