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    The Bull Case For Kratos Defense & Security Solutions (KTOS) Could Change Following KeyBanc’s Hypersonics-Focused Upgrade

    Simply Wall St·12/22/2025 09:20:55
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    • Earlier this month, KeyBanc Capital Markets initiated coverage of Kratos Defense & Security Solutions with an Overweight rating, emphasizing its exposure to hypersonics, collaborative combat aircraft drones, and other advanced Pentagon programs alongside recent facility expansions in Vancouver, Jerusalem, and Michigan.
    • This combination of bullish analyst coverage and growing production footprint highlights how Kratos is increasingly aligned with modernization priorities in global defense procurement.
    • We’ll now examine how this upbeat KeyBanc coverage, centered on Kratos’s rapid, low-cost unmanned systems, may influence its investment narrative.

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    Kratos Defense & Security Solutions Investment Narrative Recap

    To own Kratos, you have to believe its focus on hypersonics, unmanned systems and other advanced Pentagon programs can translate into sustained contract wins and improving profitability, despite heavy ongoing investment and working capital needs. The upbeat KeyBanc initiation reinforces that near term catalyst of program momentum, but it does not materially change the key risk that Kratos is building capacity ahead of fully secured, scaled awards.

    The recent facility expansions in Vancouver, Jerusalem and Michigan are the clearest “proof point” behind KeyBanc’s thesis, showing Kratos actively ramping its footprint to support engines, propulsion and microwave electronics tied to next generation defense programs. These build outs can help underpin future revenue growth if program ramps proceed as expected, but they also magnify the impact of any delays or shortfalls in contract awards on margins and cash generation.

    However, these expansions also increase the exposure investors should be aware of if major unmanned or hypersonic contract decisions were to...

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

    Kratos Defense & Security Solutions' narrative projects $1.9 billion revenue and $101.6 million earnings by 2028. This requires 17.0% yearly revenue growth and roughly a $87.1 million earnings increase from $14.5 million today.

    Uncover how Kratos Defense & Security Solutions' forecasts yield a $100.56 fair value, a 33% upside to its current price.

    Exploring Other Perspectives

    KTOS 1-Year Stock Price Chart
    KTOS 1-Year Stock Price Chart

    Fourteen fair value estimates from the Simply Wall St Community span roughly US$4 to US$101 per share, showing just how far apart individual views can be. As you weigh that spread against Kratos’ heavy upfront facility builds ahead of full program scale, it is worth exploring several of these perspectives to see how different investors think about the trade off between growth potential and execution risk.

    Explore 14 other fair value estimates on Kratos Defense & Security Solutions - why the stock might be worth as much as 33% more than 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.

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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.