Cantor Fitzgerald on Kratos Defense & Security (KTOS): 'we think this time market sentiment is under-appreciating the upside and sustainability '

Cantor Fitzgerald analyst Colin Canfield reiterated an Overweight rating and $60.00 price target on Kratos Defense & Security (NASDAQ: KTOS).

The analyst comments "While we’ve seen significant run-ups in share price ahead of X-58’s expected entry into services, we think this time market sentiment is under-appreciating the upside and sustainability of KTOS’ growth algorithm, especially as we consider Group 4-5 drones as not a “winner take all” as implied by CCA, but part of a series of service-branch solutions where each drone fits each mission. In this setup, we especially like the X-58 as U.S. force structure decisions move from survivable to attrition-derived outcomes. We also think KTOS has best-in-class potential for assuming a greater role in the microwave electronics and munitions markets, thanks to their work around higher-value systems and classified programs. Taking out our playbook of cash flow vs. catalysts, we expect KTOS to appreciate from catalysts first, then from cash flow as investments through the next 3Y provide KTOS opportunities to scale into a significantly larger role. Speaking on the X-58, while we think Air Force ultimately dual sources Gen Atomics + Anduril for CCA, we expect X-58 to find itself right at home with service branches that place a higher emphasis on attritionlethality frameworks. Taken together, we think KTOS is still early innings in its growth trajectory after years of careful investment in drones, and electronics position itself well to take on more significant Prime-like capabilities."

For an analyst ratings summary and ratings history on Kratos Defense & Security click here. For more ratings news on Kratos Defense & Security click here.

Shares of Kratos Defense & Security closed at $58.91 yesterday.

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