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Investing.com - Truist Securities raised its price target on Kratos Defense & Security (NASDAQ:KTOS) stock to $52.00 from $38.00 on Thursday, while maintaining a Buy rating on the defense technology company.
The price target increase follows Kratos’ announcement and pricing of an approximately 15 million share offering after Wednesday’s market close. The offering is expected to generate over $483 million in proceeds for the company. With a current market capitalization of $6.25 billion and a healthy current ratio of 2.84, the company maintains strong liquidity position.
Kratos management has indicated the funds will support several new capital expenditure projects totaling more than $200 million. These investments are being established to directly support new opportunities and recent program wins.
According to Truist, these new projects have the potential to add more than $150 million in revenue for Kratos in the coming years. The firm noted it is not making changes to its financial model or out-period estimates at this time.
Truist explained it is now employing its bull case scenario to value Kratos shares, citing higher confidence in its 2025/2026 estimates and the potential for additional upside from new contract wins.
In other recent news, Kratos Defense & Security Solutions announced a $500 million primary equity share offering. The company plans to use the proceeds from this offering to fund investments and capital expenditures related to national security programs, finance strategic acquisitions, and for general corporate purposes, including debt reduction. The offering includes a 30-day option for underwriters to purchase up to an additional $75 million in shares. Baird, RBC Capital Markets, Truist Securities, and Raymond (NSE:RYMD) James are acting as joint book-running managers for this transaction. In related developments, Stifel maintained its Buy rating on Kratos, with a price target of $52.00, while Benchmark raised its price target from $40.00 to $48.00, citing the Defense Budget Reconciliation Bill’s incremental funding for Kratos-related programs. This bill allocates $270 million for Marine Corps unmanned combat aircraft and $400 million for the Multi-Service Advanced Capability Hypersonic Test Bed. Kratos has been involved with the Marines on the Valkyrie drone and recently secured a $1.45 billion contract for hypersonic testing. These developments highlight Kratos’s ongoing efforts to expand its operations and capabilities in defense and national security sectors.
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