Why Kratos Stock Bumped Higher Today

Key Points

• An analyst upgraded his recommendation on the shares from neutral to buy.

• He was particularly impressed with the company's recent success with a Marine Corps program.

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Kratos Defense & Security Solutions (NASDAQ: KTOS) investors might be tempted to celebrate the coming weekend early, following an analyst's recommendation upgrade for their stock. That sentiment-boosting event occurred Thursday before market open, and helped the company's shares trade in positive territory.

They closed that session 0.5% higher, slightly exceeding the rise of the S&P 500 index.

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BTIG is now big on the company

The person upping his recommendation on Kratos was BTIG's Andre Madrid, who has set a price target of $80 per share for the defense stock.

Image source: Getty Images.

According to reports, Madrid feels that several developments have swung in the defense company's favor recently. A major one he cited is the Marine Corps's MUX TACAIR unmanned aerial systems (UAS) program, for which the company was downselected. This portends quite well for Kratos's general UAS business.

The analyst also waxed bullish about the company's potential in other product segments, singling out categories such as hypersonics and microwave technologies.

Join the club

Madrid's upgrade is part of a trend among analysts, more than a few of whom have become more positive about Kratos's future lately. Earlier this week, a clutch of them raised their price targets on the shares, while one (Cannacord Genuity's Austin Moeller) initiated coverage with a buy rating.

This was to be expected, to a degree, as the company scored a double beat on its second-quarter earnings, which it reported last week. It particularly impressed the market with a 17% year-over-year increase in sales, not to mention topping the average analyst revenue estimate with full-year guidance of $1.3 billion.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.