Kratos (KTOS) Shares Skyrocket, What You Need To Know

What Happened?

Shares of aerospace and defense company Kratos (NASDAQ:KTOS) jumped 17.2% in the morning session after the U.S. government proposed a monumental $1.5 trillion defense budget and the company was selected for a key U.S. Marine Corps contract. 

The proposed budget for 2027, aimed at accelerating military modernization, caused a rally across global defense stocks. Kratos expressed support for the policy, noting that it reinvests its capital into technology development rather than stock buybacks. Adding to the positive news, Northrop Grumman was awarded a contract to develop the U.S. Marine Corps' new tactical aircraft. This project will incorporate Kratos' Valkyrie uncrewed aerial system to work alongside crewed fighters. This selection represented a significant win for Kratos, validating its technology and positioning it at the center of future military strategy.

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What Is The Market Telling Us

Kratos’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. But moves this big are rare even for Kratos and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 3 days ago when the stock gained 13.2% on the news that Jones Research initiated coverage of the defense company with a buy rating and a $150 price target. 

The price target suggested the stock could nearly double. Adding to the positive sentiment, Kratos also announced it had recently received approximately $30 million in national security-related contracts for hardware production. Furthermore, the company reported the completion of the first factory acceptance test of its EPOCH command and control system with Airbus' OneSat satellite platform, demonstrating that its system could fully leverage the features of the advanced satellites. This news followed a period of strong performance, with the company having previously reported sales growth of 26% year over year.

Kratos is up 36.5% since the beginning of the year, and at $108.26 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 $4,075.

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