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Update shared on11 Oct 2025

Fair value Increased 17%
AnalystConsensusTarget's Fair Value
US$86.71
2.2% overvalued intrinsic discount
11 Oct
US$88.62
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1Y
251.4%
7D
-10.1%

Analysts have raised their price target for Kratos Defense & Security Solutions, increasing the estimated fair value to approximately $86.71 from $74.21. This change is attributed to strong execution across key business segments and continued optimism about the company’s growth prospects and opportunities in unmanned systems, defense modernization, and adjacent markets.

Analyst Commentary

Recent street research highlights both optimism and caution among analysts regarding Kratos Defense & Security Solutions’ outlook, valuation, and momentum. The company’s execution and exposure to high-growth markets support an increasingly positive view. However, some caution is warranted as shares approach higher multiples.

Bullish Takeaways
  • Bullish analysts continue to raise price targets, with recent increases reflecting expanding growth prospects across unmanned systems, space technologies, and turbine engines.
  • Recent contract wins and a record project pipeline of $13 billion signal strong execution and substantial revenue visibility over the next several years.
  • Exposure to critical modernization initiatives, including air defense, hypersonics, drones, and commercial space, positions Kratos well to benefit from sector-wide investment and geopolitical tailwinds.
  • Some analysts project that Kratos’ next-generation portfolio could drive annual revenue growth of 20% to 30% through 2030, along with expanding profit margins.
Bearish Takeaways
  • Bearish analysts note stretched valuation levels and suggest that the stock price is increasingly driven by enthusiasm for comparable technology sector multiples rather than underlying free cash flow fundamentals.
  • There are concerns that the rapid price appreciation may have outpaced the company’s probable net present value, creating a potential disconnect between near-term financials and market expectations.
  • While execution has been strong, further performance is required to justify premium valuations and sustained share price momentum, especially as competition in defense modernization accelerates.

What's in the News

  • Raymond James raised Kratos Defense's price target to $80, citing strong Q2 results and a record $13 billion pipeline, which covers projected growth through 2026 (Raymond James).
  • President Trump is preparing to relax arms control rules, enabling expanded international sales of advanced U.S. military drones. Kratos is identified among the primary beneficiaries (Reuters).
  • Kratos was awarded Phase 1 of a multi-phase, $175 million contract to develop an organic sustainment capability for the U.S. Navy’s AN/SPY-1 radar systems. This includes construction of a new dedicated facility in Indiana.
  • Kratos completed the Preliminary Design Review for the Space Development Agency's Advanced Fire Control Ground Integration system, clearing the way for accelerated progress on a $116.7 million contract.
  • Kratos and GE Aerospace launched altitude testing of the GEK800 small engine, which is targeted toward next-generation unmanned aircraft and collaborative combat platforms.

Valuation Changes

  • Consensus Analyst Price Target: Increased from $74.21 to $86.71, reflecting a notable upward revision in fair value estimates.
  • Discount Rate: Edged up slightly from 7.65% to 7.68%, suggesting a modest increase in risk assumptions.
  • Revenue Growth: Marginally decreased from 17.38% to 17.36%, indicating a virtually unchanged growth outlook.
  • Net Profit Margin: Improved slightly from 5.20% to 5.22%, pointing to minor anticipated profitability gains.
  • Future P/E: Risen from 186.8x to 218.1x, which highlights a higher expected valuation multiple based on forward earnings.

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.