Truist raises Kratos Defense shares price target By Investing.com

Truist Securities increased its price target for Kratos Defense (NASDAQ:) & Security (NASDAQ: KTOS) shares from $25.00 to $27.00, while retaining a Buy rating on the stock.

The adjustment follows recent meetings with the company’s management, including CEO Eric DeMarco and CFO Deanna Lund.

The firm’s analyst supports the Buy rating, emphasizing Kratos Defense as a standout for organic growth among small to mid-cap companies in the defense sector.

The analyst anticipates that the company will exceed its long-term revenue growth model of 8-12% as it secures orders for unmanned tactical drones.

Kratos Defense’s burgeoning involvement in the hypersonics, turbofan, and turbojet engine markets is also seen as a strategic advantage. The expansion is expected to bolster the company’s presence in the missile and small drone market, contributing to its growth prospects.

In other recent news, Kratos Defense & Security has been in the spotlight due to several significant developments. The company surpassed Q2 financial forecasts, reporting revenues of $300.1 million and adjusted EBITDA of $29.9 million.

Furthermore, Kratos secured a $79.9 million contract from the U.S. Air Force for the enhancement and procurement of unmanned aerial target systems, potentially reaching a total value of $374 million if all options are exercised.

Analysts from BTIG maintained a Neutral rating on the company’s stock, focusing on the potential financial impact of Kratos securing a contract for the Collaborative Combat Aircraft (CCA) tactical drone program.

Meanwhile, Baird analysts raised their price target for Kratos shares to $35 from the previous $22, maintaining an Outperform rating based on promising growth opportunities for the Valkyrie and Firejet platforms.

Kratos also completed a series of ground tests for a new turbofan engine in partnership with GE Aerospace, a development that received a Buy rating from a Benchmark analyst.

The company is expanding its drone manufacturing capabilities and investing in new launch capabilities for the Valkyrie system, with plans for further expansion in Oklahoma. Shield AI demonstrated its Hivemind AI pilot’s ability to autonomously control multiple Kratos MQM-178 Firejet aircraft, marking a significant advancement in autonomous aviation technology.

InvestingPro Insights

Truist Securities’ recent price target increase for Kratos Defense & Security (NASDAQ:KTOS) to $27.00 is underpinned by strong growth prospects and strategic market positioning. Supporting this view, InvestingPro Tips highlight that Kratos holds more cash than debt on its balance sheet and is expected to see net income growth this year. These factors contribute to the company’s financial resilience and potential for future expansion.

InvestingPro Data provides further context to the company’s valuation and performance. With a market capitalization of approximately $3.48 billion, Kratos is trading at a high earnings multiple, with a P/E ratio of 321.39. The company’s revenue growth has been robust, recording a 16.46% increase over the last twelve months as of Q2 2024. Additionally, Kratos has demonstrated a strong return over the last year, with a price total return of 58.82%.

For readers seeking additional insights, there are more InvestingPro Tips available, which delve deeper into the company’s valuation metrics and performance indicators. These tips may offer valuable perspectives for investors considering Kratos Defense & Security as part of their investment portfolio.

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