Update shared on 23 Nov 2025
Fair value Decreased 0.20%Kratos Defense & Security Solutions saw its analyst price target inch down marginally from $100.00 to $99.80. Analysts cited tempered profit margin and revenue growth expectations while still acknowledging robust deal flow and market opportunities.
Analyst Commentary
Recent analyst actions reflect a strong but increasingly nuanced outlook for Kratos Defense & Security Solutions. While the majority highlight significant growth drivers and market opportunities, a minority voice growing concerns about valuation and risk factors. Below, key bullish and bearish takeaways are summarized based on the latest research updates.
Bullish Takeaways- Bullish analysts continue to raise their price targets in response to Kratos' multi-year growth prospects, citing abundant business opportunities and expanding markets, particularly following recent acquisitions and franchise launches.
- Upward revisions to revenue guidance, along with high-profile contract awards and technical achievements such as advancements in AI-enabled defense systems, underscore management's ability to execute on strategic initiatives.
- The long-term outlook benefits from resilient defense fundamentals, supported by favorable government budgets and geopolitical tailwinds. This signals a strong pipeline for future contract awards and expansion opportunities.
- Participation across diverse domains, including unmanned systems, space, and advanced electronics, points to multiple levers for sustained capital appreciation and market share gains.
- Bearish analysts caution that the company's valuation is approaching levels that may be difficult to justify based solely on probable future free cash flow. This raises the risk of underperformance if growth expectations are not met.
- Concerns linger regarding stretched multiples and increasing correlation with high-flying technology sector valuations, suggesting sensitivity to broader market sentiment shifts.
- Potential risks remain around government shutdowns and contract timing delays, which could impact near-term financial results and introduce uncertainty into revenue visibility.
- Some caution that while recent wins and strategic moves demonstrate robust execution, expectations for margin and revenue growth may now be tempered relative to prior optimism.
What's in the News
- President Trump is moving to ease restrictions on sales of advanced U.S. military drones, which could streamline international sales for companies like Kratos and open major foreign markets (Reuters).
- Kratos announced the relocation of its Jerusalem Microwave Electronics Division to a new 60,000-square-foot high-tech facility, representing significant investment in international infrastructure and manufacturing capabilities.
- The company opened a new propulsion manufacturing facility in Auburn Hills, Michigan, increasing production of its Spartan line of turbojet engines to meet rising defense demand.
- Kratos, in collaboration with GE Aerospace, successfully completed altitude and durability testing of the GEK800 engine for next-generation affordable unmanned aerial systems, progressing toward production readiness.
- A multi-million-dollar contract was awarded to Kratos to design a new hypersonic material testing facility, Project Helios, further strengthening its presence in the U.S. defense industrial base.
Valuation Changes
- Consensus Analyst Price Target has decreased marginally from $100.00 to $99.80, reflecting tempered optimism in valuation.
- Discount Rate has fallen slightly, moving from 7.52% to approximately 7.48%. This suggests a modest decrease in perceived risk or cost of capital.
- Revenue Growth expectations have been revised downward from 19.03% to 18.04%. This indicates slightly reduced confidence in near-term top-line expansion.
- Net Profit Margin projections have declined from 5.67% to 5.21%, which points to moderated profitability assumptions.
- Future P/E ratio has increased from 208.5x to 231.8x, signaling that valuation metrics are now higher relative to anticipated earnings.
Disclaimer
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