Kratos Analyst Sees Growth Potential As Tactical Drones, Hypersonics Gain Traction

JPMorgan analyst Seth M. Seifman raised the price forecast for Kratos Defense & Security Solutions, Inc. KTOS to $33.00 from $27.00 while maintaining a Neutral rating.

The analyst shared key takeaways related to a call with Kratos CEO Eric DeMarco and CFO Deanna Lund.

Seifman says that Kratos is advancing steadily in its tactical drone initiatives, with a significantly lower risk of program setbacks.

The analyst writes that Marine Corps leadership appears supportive, and he anticipates positive developments driven by multiple upcoming catalysts.

The analyst notes that Kratos is poised to play a pivotal role in the DoD's push to enhance U.S. hypersonic weapons capabilities.

The analyst says that the company has already secured a leadership position in hypersonic testing through its MACH-TB 2.0 contract, which is expected to scale to several hundred million dollars in annual sales.

The analyst adds that Kratos’ core businesses in Satellite Communications and Target Drones are showing strong performance and are positioned for continued growth beyond drones.

This month, the company announced its OpenEdge 2500 achieved Digital IF Interoperability Consortium (DIFI) compliance.

The Kratos Defense OpenEdge 2500 system helps satellite antenna makers digitally enable their products by converting radio frequency signals into Internet protocol data streams. The company noted that the signal can be easily incorporated for use in modern communications networks.

Investors can gain exposure to the stock via ARK Space Exploration & Innovation ETF ARKX and ARK Autonomous Technology & Robotics ETF ARKQ.

Price Action: KTOS shares are down 2.7% at $30.84 at last check Friday.

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