Investing.com — Shares of Kratos Defense & (NASDAQ:) Security Solutions, Inc. (NASDAQ:KTOS) climbed 5.5% after receiving a significant analyst upgrade from B.Riley. The defense contractor’s stock movement follows an upgrade from Neutral to Buy, with a price target increase from $26 to $35, reflecting confidence in the company’s recent $1.45 billion contract award for the Multi-Service Advanced Capability Hypersonic Test Bed (MACH-TB) 2.0.
The analyst at B.Riley, Mike Crawford, expressed a bullish stance on Kratos, highlighting the contract as the single largest in the company’s history and a substantial victory from its $12 billion bid and proposal pipeline. “This is the single largest contract award in KTOS’ history as well as a significant win from what had been a $12B qualified bid & proposal pipeline for KTOS,” Crawford stated.
Kratos announced last week that it had secured a five-year Other Transaction (JO:) Authority (OTA) contract, valued at $1.45 billion if all options are exercised, to support the U.S. Department of Defense’s National Hypersonic Initiative 2.0. The contract aims to enhance hypersonic flight testing capabilities, which is crucial for maintaining the pace of defense development in the face of global threats.
The company will take on the prime role for Systems Engineering, Integration, and Testing (SEIT) in Task Area 1, leading a team that includes industry partners such as Leidos, Rocket Lab, and several universities. The initiative is expected to bridge the gap between ground tests and full-system level flight tests, reducing development risks and accelerating the delivery of hypersonic technologies to the military.
Kratos’ involvement in the MACH-TB 2.0 program is seen as a pivotal element of its future growth, with the company’s leadership expressing pride in their contribution to national security and the warfighter’s evolving needs. The contract award not only solidifies Kratos’ position in the defense sector but also underscores its commitment to affordable and rapid innovation in critical mission areas.
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