Why Kratos (KTOS) Stock Is Up Today

What Happened?

Shares of aerospace and defense company Kratos (NASDAQ:KTOS) jumped 2.8% in the morning session after the company announced it had been awarded Phase 1 of a contract by the U.S. Navy to develop a sustainment capability for its AN/SPY-1 radar systems. 

The single-award agreement, which has a projected ceiling of $175 million across multiple phases, involves developing a support system for the critical radar technology. These radar systems are deployed on the Navy's Aegis-equipped cruisers and destroyers and are expected to remain in service for decades. This contract represented a significant win for Kratos, signaling confidence from a major military branch and securing a potential long-term revenue stream.

After the initial pop the shares cooled down to $99.52, up 3.5% from previous close.

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What Is The Market Telling Us

Kratos’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 11 days ago when the stock gained 4.2% on the news that RBC raised its price target on the company. Also, Kratos was selected as the exclusive U.S. manufacturer for Elroy Air's Chaparral cargo drone. 

The investment firm RBC increased its price target on the stock to $90 from $65 while keeping an Outperform rating. In separate news, the uncrewed aircraft specialist was picked by Elroy Air for an initial five-year contract to speed up high-volume production of its Chaparral drone. This hybrid-electric aircraft was designed to carry a 135kg payload in an underslung cargo pod over a range of 300 miles for both commercial and military use. 

Adding to the day's positive developments, Kratos also announced it would display its advanced unmanned jet drones at the upcoming Marine Corps Air Station Miramar Air Show.

Kratos is up 277% since the beginning of the year, and at $99.52 per share, has set a new 52-week high. Investors who bought $1,000 worth of Kratos’s shares 5 years ago would now be looking at an investment worth $5,052.

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