Kratos Defense Upgraded to Overweight but Stock Falls
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 12 2026
0mins
Source: seekingalpha
- Rating Upgrade vs. Stock Reaction: Despite J.P. Morgan upgrading Kratos from Neutral to Overweight, the stock fell 1.7% on Friday, indicating mixed market reactions and investor caution regarding the company's future performance.
- Market Outlook and Valuation: Analysts noted Kratos's progress in hypersonics, tactical drones, and turbojet engines, suggesting that while the stock has dropped over 50% since mid-January, its current valuation is attractive for long-term investors.
- Growth Potential and Financial Health: Kratos is expected to achieve a compound annual growth rate exceeding 20% from 2026 to 2028; although cash flow remains negative, it is manageable, with projected cash flow around $100 million this year, down from $137 million last year, reflecting investments in capex and working capital.
- Strategic Investments and Market Positioning: By partnering with major industry players and offering more affordable high-end systems, Kratos has distinguished itself in the fast-growing defense market, with analysts emphasizing the company's proactive investments to meet Department of Defense needs, enhancing its market position.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy KTOS?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on KTOS
Wall Street analysts forecast KTOS stock price to rise
13 Analyst Rating
11 Buy
2 Hold
0 Sell
Strong Buy
Current: 56.160
Low
80.00
Averages
108.69
High
150.00
Current: 56.160
Low
80.00
Averages
108.69
High
150.00
About KTOS
Kratos Defense & Security Solutions, Inc. is a technology, products, system and software company addressing the defense, national security, and commercial markets. It operates through two segments: Kratos Government Solutions (KGS) and Unmanned Systems (US). The KGS segment includes its microwave electronic products, space, satellite and cyber, training solutions, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR)/modular systems, turbine technologies, and defense and rocket support services operating segments. The US segment consists of its unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. Its KGS and US segments provide products, solutions and services for mission-critical National Security programs. KGS and US customers primarily include National Security-related agencies, the DoD, intelligence agencies and classified agencies, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Trump Announces U.S.-Iran Interim Agreement Impacting Kratos Defense Stock
- Stock Price Decline: Kratos Defense & Security's stock fell 4.4% by 11:55 a.m. ET Thursday, primarily due to President Trump's announcement of an interim agreement between the U.S. and Iran, leading investors to view this as negative for Kratos's outlook.
- Agreement Overview: The interim agreement initiates 60 days of intense negotiations regarding the status of the Strait of Hormuz and Iran's nuclear weapons program, although these details have limited immediate relevance to Kratos stock, they provide essential context for investors.
- Market Reaction Analysis: If the peace deal holds, it may depress demand for new drones from Kratos; however, since Kratos primarily produces target-practice drones that were not involved in the Iran conflict, sales are unlikely to be adversely affected.
- Future Outlook: While the current situation has minimal direct impact on Kratos, investors should remain vigilant about potential future developments that could influence the company's business, particularly regarding fluctuations in drone market demand.
See More
SpaceX Achieves Historic $75 Billion IPO, Valued at $2.1 Trillion
- Historic IPO: SpaceX went public on June 11 at $135 per share, opening at $150 and closing at $160.95, marking a 19% gain and a market capitalization of $2.1 trillion, making it the sixth-largest company in the U.S., achieving the largest IPO in history, surpassing Saudi Aramco's 2019 record.
- Capital Utilization Plan: The $75 billion raised will be allocated to Starship production, Starlink constellation expansion, Terafab manufacturing, and orbital infrastructure development, driving the growth of the commercial space economy and enhancing SpaceX's competitiveness in the global market.
- Alphabet's Windfall: Alphabet's $900 million investment in SpaceX in 2015 is now valued at approximately $122 billion, significantly exceeding its annual net income, highlighting the extraordinary asset appreciation following SpaceX's public listing, further solidifying Alphabet's leadership in search and cloud computing.
- Rocket Lab's Market Opportunity: As a key player in the small satellite launch market, Rocket Lab is developing its Neutron rocket and has signed contracts worth nearly $1 billion, benefiting from SpaceX's IPO which is expected to attract more institutional capital into space infrastructure, enhancing its market position.
See More
SpaceX's Record IPO Creates Opportunities for Suppliers and Partners
- Alphabet's Hidden Gains: Alphabet's 6.11% stake in SpaceX is now valued at approximately $122 billion, showcasing an extraordinary unrealized gain following SpaceX's IPO, which solidifies its dominance in search, cloud, and AI markets.
- Rocket Lab's Market Opportunity: As a key player in the small satellite launch market that SpaceX cannot serve, Rocket Lab is developing its Neutron medium-lift rocket and has signed contracts worth nearly $1 billion, positioning it to benefit directly from the industry attention and capital influx following SpaceX's IPO.
- Kratos' Infrastructure Demand: Kratos Defense secured a $446.8 million contract to build ground architecture for the U.S. military's next-generation missile warning constellation, and with increased launch demands from SpaceX's IPO, its commercial software-defined satellite ground solutions are set to capture a larger market share.
- Intuitive Machines' Lunar Economy: Intuitive Machines has a backlog of $1.055 billion as of Q1 2026, and as SpaceX's Starship advances lunar missions, its role in the lunar economy will expand, driving further commercial growth.
See More
VisionWave Files Patent Application for SDNN AI Architecture
- Historic Defense Budget: The Pentagon's proposed fiscal 2027 budget allocates over $70 billion for drones and counter-UAS systems, marking the largest single-year investment in U.S. history, indicating a strong commitment to autonomous defense technologies that could accelerate industry growth.
- Patent Application Details: VisionWave filed a provisional patent application on June 4, 2026, featuring a 455-page specification and 23 engineering drawings, aimed at establishing a unified reasoning and coordination layer for distributed intelligent systems, reflecting its ambitious vision in AI.
- Strategic Acquisition Moves: VisionWave is set to acquire a 52% controlling interest in Foresight Autonomous Holdings Ltd. for $17.5 million, intending to position it as a core platform for RF perception systems, thereby enhancing its integration of AI and computer vision technologies.
- Competitive Market Challenges: VisionWave faces intense competition from larger players like Palantir in the AI decision software and autonomous systems space, highlighting the significant market potential while underscoring the challenges of developing and commercializing its technology at this early stage.
See More
VisionWave Files Patent Application for SDNN AI Architecture
- Historic Defense Budget: The Pentagon's proposed fiscal 2027 budget allocates over $70 billion for drones and counter-UAS systems, marking the largest single-year investment in autonomous defense, which could significantly boost market demand for related companies.
- Patent Application Details: VisionWave filed a provisional patent for its SDNN™ architecture on June 4, 2026, including a 455-page specification and 23 engineering drawings, aiming to establish a unified coordination layer for intelligent systems in defense and security.
- Strategic Acquisition Moves: VisionWave plans to acquire a 52% controlling interest in Foresight Autonomous Holdings Ltd. for $17.5 million, intending to position it as a core platform for RF perception systems, thereby enhancing its competitiveness in the drone and counter-drone markets.
- Integration Challenges Ahead: While VisionWave's ambitions in AI and autonomous systems are significant, the company faces substantial integration risks and capital requirements, needing to navigate the complexities of technology development and fierce market competition.
See More
JPMorgan Bullish on Kratos Growth Prospects
- Price Target Adjustment: JPMorgan lowered Kratos' price target from $99 to $82, yet the revised target still implies a 42% upside, reflecting analysts' confidence in the company's growth potential.
- Surge in Unmanned Systems Revenue: Kratos reported a 30.9% increase in unmanned systems revenue in Q1 and raised its 2026 outlook to $1.7 billion, surpassing analysts' consensus estimate of $1.74 billion, indicating strong performance in defense spending opportunities.
- Improved Financial Position: Analysts highlighted an improving balance sheet for Kratos, with expectations of lower cash usage this year compared to last, although ongoing growth initiatives and working capital needs may continue to pressure free cash flow.
- Market Sentiment Analysis: Despite KTOS stock gaining over 40% in the past 12 months, retail sentiment on Stocktwits remains bearish, indicating a divergence in market perceptions regarding the company's future performance.
See More
Trump Announces U.S.-Iran Interim Agreement Impacting Kratos Defense Stock
- Stock Price Decline: Kratos Defense & Security's stock fell 4.4% by 11:55 a.m. ET Thursday, primarily due to President Trump's announcement of an interim agreement between the U.S. and Iran, leading investors to view this as negative for Kratos's outlook.
- Agreement Overview: The interim agreement initiates 60 days of intense negotiations regarding the status of the Strait of Hormuz and Iran's nuclear weapons program, although these details have limited immediate relevance to Kratos stock, they provide essential context for investors.
- Market Reaction Analysis: If the peace deal holds, it may depress demand for new drones from Kratos; however, since Kratos primarily produces target-practice drones that were not involved in the Iran conflict, sales are unlikely to be adversely affected.
- Future Outlook: While the current situation has minimal direct impact on Kratos, investors should remain vigilant about potential future developments that could influence the company's business, particularly regarding fluctuations in drone market demand.
See More
SpaceX Achieves Historic $75 Billion IPO, Valued at $2.1 Trillion
- Historic IPO: SpaceX went public on June 11 at $135 per share, opening at $150 and closing at $160.95, marking a 19% gain and a market capitalization of $2.1 trillion, making it the sixth-largest company in the U.S., achieving the largest IPO in history, surpassing Saudi Aramco's 2019 record.
- Capital Utilization Plan: The $75 billion raised will be allocated to Starship production, Starlink constellation expansion, Terafab manufacturing, and orbital infrastructure development, driving the growth of the commercial space economy and enhancing SpaceX's competitiveness in the global market.
- Alphabet's Windfall: Alphabet's $900 million investment in SpaceX in 2015 is now valued at approximately $122 billion, significantly exceeding its annual net income, highlighting the extraordinary asset appreciation following SpaceX's public listing, further solidifying Alphabet's leadership in search and cloud computing.
- Rocket Lab's Market Opportunity: As a key player in the small satellite launch market, Rocket Lab is developing its Neutron rocket and has signed contracts worth nearly $1 billion, benefiting from SpaceX's IPO which is expected to attract more institutional capital into space infrastructure, enhancing its market position.
See More
SpaceX's Record IPO Creates Opportunities for Suppliers and Partners
- Alphabet's Hidden Gains: Alphabet's 6.11% stake in SpaceX is now valued at approximately $122 billion, showcasing an extraordinary unrealized gain following SpaceX's IPO, which solidifies its dominance in search, cloud, and AI markets.
- Rocket Lab's Market Opportunity: As a key player in the small satellite launch market that SpaceX cannot serve, Rocket Lab is developing its Neutron medium-lift rocket and has signed contracts worth nearly $1 billion, positioning it to benefit directly from the industry attention and capital influx following SpaceX's IPO.
- Kratos' Infrastructure Demand: Kratos Defense secured a $446.8 million contract to build ground architecture for the U.S. military's next-generation missile warning constellation, and with increased launch demands from SpaceX's IPO, its commercial software-defined satellite ground solutions are set to capture a larger market share.
- Intuitive Machines' Lunar Economy: Intuitive Machines has a backlog of $1.055 billion as of Q1 2026, and as SpaceX's Starship advances lunar missions, its role in the lunar economy will expand, driving further commercial growth.
See More
VisionWave Files Patent Application for SDNN AI Architecture
- Historic Defense Budget: The Pentagon's proposed fiscal 2027 budget allocates over $70 billion for drones and counter-UAS systems, marking the largest single-year investment in U.S. history, indicating a strong commitment to autonomous defense technologies that could accelerate industry growth.
- Patent Application Details: VisionWave filed a provisional patent application on June 4, 2026, featuring a 455-page specification and 23 engineering drawings, aimed at establishing a unified reasoning and coordination layer for distributed intelligent systems, reflecting its ambitious vision in AI.
- Strategic Acquisition Moves: VisionWave is set to acquire a 52% controlling interest in Foresight Autonomous Holdings Ltd. for $17.5 million, intending to position it as a core platform for RF perception systems, thereby enhancing its integration of AI and computer vision technologies.
- Competitive Market Challenges: VisionWave faces intense competition from larger players like Palantir in the AI decision software and autonomous systems space, highlighting the significant market potential while underscoring the challenges of developing and commercializing its technology at this early stage.
See More
VisionWave Files Patent Application for SDNN AI Architecture
- Historic Defense Budget: The Pentagon's proposed fiscal 2027 budget allocates over $70 billion for drones and counter-UAS systems, marking the largest single-year investment in autonomous defense, which could significantly boost market demand for related companies.
- Patent Application Details: VisionWave filed a provisional patent for its SDNN™ architecture on June 4, 2026, including a 455-page specification and 23 engineering drawings, aiming to establish a unified coordination layer for intelligent systems in defense and security.
- Strategic Acquisition Moves: VisionWave plans to acquire a 52% controlling interest in Foresight Autonomous Holdings Ltd. for $17.5 million, intending to position it as a core platform for RF perception systems, thereby enhancing its competitiveness in the drone and counter-drone markets.
- Integration Challenges Ahead: While VisionWave's ambitions in AI and autonomous systems are significant, the company faces substantial integration risks and capital requirements, needing to navigate the complexities of technology development and fierce market competition.
See More
JPMorgan Bullish on Kratos Growth Prospects
- Price Target Adjustment: JPMorgan lowered Kratos' price target from $99 to $82, yet the revised target still implies a 42% upside, reflecting analysts' confidence in the company's growth potential.
- Surge in Unmanned Systems Revenue: Kratos reported a 30.9% increase in unmanned systems revenue in Q1 and raised its 2026 outlook to $1.7 billion, surpassing analysts' consensus estimate of $1.74 billion, indicating strong performance in defense spending opportunities.
- Improved Financial Position: Analysts highlighted an improving balance sheet for Kratos, with expectations of lower cash usage this year compared to last, although ongoing growth initiatives and working capital needs may continue to pressure free cash flow.
- Market Sentiment Analysis: Despite KTOS stock gaining over 40% in the past 12 months, retail sentiment on Stocktwits remains bearish, indicating a divergence in market perceptions regarding the company's future performance.
See More
