Kratos Defense (KTOS) Is Up 11.5% After Major Aerospace Partnership and Defense Milestone—Has the Bull Case Changed?

• In late September 2025, Kratos Defense & Security Solutions achieved a significant milestone by completing the Preliminary Design Review for the Space Development Agency’s Advanced Fire Control Ground Integration program with zero liens, and was named as Elroy Air’s exclusive U.S. manufacturing partner for its Chaparral VTOL cargo drone. These operational advances reflect Kratos’ growing influence in unmanned systems and advanced propulsion technologies across defense and aerospace sectors.
• With its successful design review completion and new high-volume manufacturing partnership, Kratos is consolidating its first-mover position in next-generation unmanned platforms and integrated ground systems.
• We’ll examine how Kratos’ progress on the AFCGI program highlights its execution capability and potential to accelerate contract-driven growth.

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Kratos Defense & Security Solutions Investment Narrative Recap

To be a Kratos Defense & Security Solutions shareholder, you need confidence in the continued expansion of global defense procurement that rewards companies swiftly delivering advanced, integrated unmanned systems. The recent milestone of completing the Preliminary Design Review for the AFCGI program reinforces Kratos' project execution; however, it does not eliminate the company's most pressing short-term risk: heavy upfront investment in new production capacity, which could pressure free cash flow if contract timing is delayed or fails to justify the outlays.

Kratos’ new exclusive manufacturing agreement with Elroy Air to produce the Chaparral VTOL drone stands out as particularly relevant, directly tying operational capacity to anticipated growth in high-volume unmanned system demand. This partnership reflects Kratos’ strategy to convert emerging government and commercial interest into actual program ramps, potentially positioning it well to capitalize as defense procurement accelerates.

Yet, despite these contract wins, investors should keep in mind that any slippage in government awards or changes to procurement priorities could leave Kratos with...

Read the full narrative on Kratos Defense & Security Solutions (it's free!)

Kratos Defense & Security Solutions' outlook forecasts $1.9 billion in revenue and $101.6 million in earnings by 2028. To reach these targets, analysts expect annual revenue growth of 17.0% and an increase in earnings of $87.1 million from the current $14.5 million.

Uncover how Kratos Defense & Security Solutions' forecasts yield a $74.21 fair value, a 23% downside to its current price.

Exploring Other Perspectives

Ten members of the Simply Wall St Community project Kratos’ fair value between US$8.71 and US$78.51 per share. While forecasts vary widely, many focus on contract timing and the risks of upfront investments affecting near-term cash generation, which could shape Kratos' future performance and cash returns.

Explore 10 other fair value estimates on Kratos Defense & Security Solutions - why the stock might be worth less than half the current price!

Build Your Own Kratos Defense & Security Solutions Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Kratos Defense & Security Solutions research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Kratos Defense & Security Solutions research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Kratos Defense & Security Solutions' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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