Can Kratos Defense (KTOS) Stock Reach $15? The Street Does Share Optimism


Kratos Defense (NASDAQ:KTOS) has just reported its first-quarter earnings and shares are putting together a nice rally. While total revenue of $146 million came in a bit below what Wall Street was expecting (145 million), EBITDA of $13.7 million outpaced the Street’s $9.5 million projection. Looking ahead, the company has affirmed FY18 guidance, including $640-$650 million revenue and $55-$59 million EBITDA, with 2H much stronger than 1H,

Noble Financial analyst Ben Klieve commented, “The first quarter met expectations, with overall growth of 8% growth driven by 78% growth in the UAS segment. The KGS segment delivered roughly flat results, with growth in the strong SatCom, Training and Microwave businesses being offset by declines in non-core government services business. […] We are maintaining our full year estimates for both 2018 and 2019, but upside potential exists as the two year budget could accelerate funding. At the very least, its passage enhances visibility in the near term, and likely accelerates development schedules of programs still in their infancy.”

“Important to the investment thesis is that much of the rapid projected UAS growth comes from programs under contract. There is a high degree of visibility regarding our expectation that the segment can grow in excess of 30% annually through 2019, with growth in excess of this possible as tactical programs pivot to full run rate production in the 2020-2021 timeframe,” the analyst added.

Klieve reiterates a Buy rating on Kratos shares, with a price target of $15, which implies an upside of 31% from current levels. (To watch Klieve’s track record, click here)

How does Klieve’s bullish bet weigh in against the Street? It appears the analyst is not the only one enthusiastic on this aerospace firm’s prospects, with TipRanks analytics demonstrating KTOS as a Strong Buy. Out of 4 analysts polled in the last 3 months, all 4 are bullish on Kratos stock. With a return potential of nearly 30%, the stock’s consensus target price stands at $15.00.

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