Seaport Global Securities Starts Kratos Defense & Security (KTOS) at Buy

Seaport Global Securities initiates coverage on Kratos Defense & Security (NASDAQ: KTOS) with a Buy rating and a price target of $10.00.

Analyst Josh Sullivan commented, "KTOS is a beneficiary of three defense industry trends, including the cyclical bottom in defense spending, a shift in the DoD's war footing toward strategic adversaries and cost vs. capability paradigms embodied in the Third Offset Strategy. KTOS was pressured from 2011-2015 as the defense budget contracted. However, 2016 marked KTOS's first year of organic growth since 2012. Further, as budgets recover from cyclical lows, the Department of Defense (DoD) shift to confronting strategic adversaries (China/Russia) aligns with KTOS's core competencies (satcom, UAVs, training). KTOS's high performance aerial drones are in a recap cycle with two large pending orders set to double the business; further, the drones are platforms for new cost-efficient unmanned aerial systems. The DoD, through paradigms like the Third Offset, is looking to maximize value by fielding existing technology in new roles. Transitioning target drones into UAS is a prime example. Last, the resolution of the CR budget is a gating factor for KTOS in 2017 that could create volatility; however, the long-term transition is underway with orders in hand. We are initiating coverage of KTOS with a Buy rating and $10 price target."

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 $7.89 yesterday.

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