Wedbush analyst Sam Brandeis initiates coverage on Kratos Defense & Security (NASDAQ: KTOS) with a Outperform rating and a price target of $85.00.

The analyst comments "We are initiating coverage on Kratos Defense and Security Solutions (KTOS) with an OUTPERFORM rating and $85 price target. Kratos is the merchant arms supplier to the entire U.S. defense complex, having chosen to sell critical subsystems, engines, hypersonic vehicles, and ground software to virtually every prime and new-entrant player rather than compete as a would-be prime. In our view this is the single most misunderstood element of the story. The market frames Kratos as a drone company fighting for platform dominance, but management has built a picks-and-shovels franchise embedded across hypersonics, missile defense, space, and microelectronics that captures content regardless of which platform wins."

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Shares of Kratos Defense & Security closed at $46.95 yesterday.