What Happened?
Shares of aerospace and defense company Kratos (NASDAQ:KTOS) jumped 3.1% in the morning session after the investment firm Cantor Fitzgerald reiterated its "Overweight" rating and $60 price target on the company.
The firm's positive stance was based on the belief that the market was underestimating the growth potential of Kratos, especially concerning its X-58 drone program. Cantor Fitzgerald noted that while the drone market is competitive, the X-58 was well-positioned as military strategies shifted towards valuing attrition-lethality frameworks, which refers to the ability to sustain combat effectiveness despite losses. This analyst action followed other recent positive news for the defense technology company, including the U.S. Marine Corps' decision to move the XQ-58 Valkyrie drone into a Program of Record, which transitions it into production. Additionally, Noble Capital recently raised its price target on Kratos to $60, citing growth opportunities in both defense and commercial markets.
After the initial pop the shares cooled down to $59.90, up 1.7% from previous close.
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What Is The Market Telling Us
Kratos’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 4.1% on the news that the company, along with partner Intelsat, announced the successful demonstration of an end-to-end 5G Non-Terrestrial Network (NTN). This technological milestone involved combining Kratos's OpenSpace® software-defined satellite ground system with Intelsat's space and ground network, proving that satellite technology can seamlessly extend terrestrial 5G networks. The successful test validates the potential to deliver widespread 5G broadband services, reaching markets currently unserved by traditional networks. This achievement positions Kratos as a key player in the integration of satellite and 5G communications.
Kratos is up 127% since the beginning of the year, and at $59.90 per share, has set a new 52-week high. Investors who bought $1,000 worth of Kratos’s shares 5 years ago would now be looking at an investment worth $3,765.
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