Kratos Defense (KTOS) Gains Buy Rating on Strong Proprietary Technology

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) ranks among the best AI stocks to buy according to analysts. B.Riley maintained its price objective of $105 and upgraded Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) from Neutral to Buy on December 1. According to the firm, Kratos has an improved risk-reward profile since it holds “ample proprietary IP enabling an array of affordable solutions.”

B. Riley emphasized that Kratos Defense & Security’s capabilities in autonomy, hypersonics, and affordable and robust C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance) could assist the company maintain and surpass expectations.

The firm’s study shows a modest decline in valuation multiples throughout the defense technology industry, with its tracked group of comparable companies currently trading at 8.7x FY26 EV/Revenue and 26.5x median EV/EBITDA, down from 10.5x and 29.0x previously. B.Riley argues that these premium multiples are nonetheless warranted for fast-growing defense technology companies amid what it calls “a generational recapitalization of strategic weapon systems” that rewards nimble innovators over traditional defense contractors.

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops advanced technology, products, and systems for defense, national security, and commercial markets. It operates two main segments, including the Government Solutions and Unmanned Systems.

While we acknowledge the potential of KTOS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.