In recent days, Kratos Defense & Security Solutions announced multi-million dollar contracts to provide the ground segment for Airbus’s OmanSat-1 software-defined satellite and to support the U.S. Department of War’s Joint Hypersonics Transition Office in testing thermal protection systems for hypersonic vehicles.
These awards deepen Kratos’s role in software-defined satellite infrastructure and hypersonic testing standards, reinforcing its position in advanced defense technologies central to current modernization efforts.
We’ll now examine how Kratos’s new hypersonics testing contract may reinforce or challenge the existing investment narrative around its growth.
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To own Kratos today, you generally have to believe that its focus on hypersonics, unmanned systems and software defined satellites can support sustained growth, even as heavy upfront investment and reliance on government budgets weigh on cash flow. The new hypersonics testing award appears directionally positive for the near term catalyst of converting recent facility and R&D spend into funded programs, while also highlighting the key risk that large, government led efforts can be lumpy and slow to translate into durable earnings and free cash flow.
Among the latest announcements, the hypersonics thermal protection testing contract is most relevant, because it ties directly to Kratos’s sizeable prior investments in hypersonics infrastructure and expertise. It reinforces the idea that those capital intensive bets may be feeding a broader ecosystem role, not just one off hardware sales, which matters for investors watching whether organic growth and margins can improve without further straining working capital and near term cash generation.
Yet even with these contract wins, investors should be aware that Kratos’s dependence on sizable U.S. defense budgets means…
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 about a $87.1 million earnings increase from $14.5 million today.
Uncover how Kratos Defense & Security Solutions’ forecasts yield a $117.63 fair value, a 21% upside to its current price.
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Some of the lowest target analysts took a much cooler view, assuming only about 13.9 percent annual revenue growth to roughly US$1.8 billion and earnings of about US$75 million by 2028, so if you are excited about the new hypersonics and satellite wins, it is worth comparing your expectations with that more cautious stance and deciding which story you find more convincing.
Explore 13 other fair value estimates on Kratos Defense & Security Solutions – why the stock might be worth as much as 41% more than the current price!
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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.
Companies discussed in this article include KTOS.
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