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Investing.com - Benchmark raised its price target on Kratos Defense & Security (NASDAQ:KTOS) to $50.00 from $48.00 on Tuesday, while maintaining a Buy rating on the defense contractor’s stock.
The research firm cited Kratos’ "right portfolio/philosophy" of low-cost advanced technology solutions at a time when battlefield experiences in Ukraine, Gaza, and Iran have demonstrated the value of capable low-cost assets against traditional high-cost/low-volume capabilities.
Benchmark noted that the recently signed FY26 defense budget and $150 billion Reconciliation Bill, approved on July 4, directly adds over $1 billion to known Kratos programs, strengthening the company’s market position.
The firm indicated that Kratos’ recent $550 million capital raise is directly related to pursuing new prime contract program opportunities in areas including radars, hypersonics, and rockets.
Benchmark’s new $50 price target represents 49 times FY26 EV/EBITDA, which the firm stated is now at a premium to peer KARM but below PLTR.
In other recent news, Kratos Defense & Security announced a $500 million equity offering, which has drawn attention from multiple analyst firms. Stifel has raised its price target for Kratos to $54, maintaining a Buy rating, and highlighted the potential for future investments, particularly in the Prometheus joint venture with Rafael Advanced Defense Systems. This partnership is expected to become a significant contributor to earnings, especially after the effectiveness of Rafael’s Iron Dome system was demonstrated during recent conflicts. Truist Securities also increased its price target to $52, citing the new capital’s role in supporting over $200 million in new projects, which could add more than $150 million in revenue in the coming years.
Goldman Sachs upgraded Kratos from Neutral to Buy, setting a price target of $52, due to the company’s strategic investments in areas crucial to future warfare, such as drone programs and missile systems. The firm also noted Kratos’s strong positioning in the growing C5ISR and space sectors, predicting significant revenue growth and improved profit margins over the medium term. These developments underscore the company’s focus on expanding its capabilities and capitalizing on new opportunities in defense technology.
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