Kratos (KTOS) Wins $50M Deal for CUAS & Air Defense Systems
Kratos Defense & Security Solutions, Inc. KTOS recently secured a $50 million contract for Products and Hardware to develop and support Counter Unmanned Aerial Systems (CUAS), Air Defense and Radar Systems.
The work related to these awards will be conducted at secure Kratos manufacturing facilities and various customer locations.
What’s Ahead?
Increasing geopolitical tensions worldwide have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, Unmanned Aerial Vehicles (UAV) have steadily become pivotal in a nation’s defense strategy. This tends to benefit Kratos as it has expertise in manufacturing UAVs for military missions. The company has been offering high-quality defense products and has won many relevant orders.
Due to an upsurge in military spending and demand for improved surveillance solutions, we may expect the UAV market to show impressive growth. In this context, per the report from by Mordor Intelligence, the UAV market is estimated at $17.31 billion in 2024 and is expected to reach $32.95 billion by 2029, at a CAGR of 13.74% during 2024-2029.
This reflects expanding market opportunities for companies like Kratos that enjoy a well-established position in the UAV market. Other defense majors that may benefit from the increasing demand for UAVs are as follows:
RTX Corp. RTX: The Coyote Unmanned Aerial Systems (UAS) is equipped with an advanced seeker and warhead that can successfully identify and eliminate threat UAVs. It is ideal for improved surveillance imagery, enhanced targeting capability, near real-time damage assessment and reduced threat to manned aircraft. The U.S. Army has selected the Coyote drone for a near-term counter-UAS solution.
RTX boasts a long-term (three-to five-years) earnings growth rate of 9.4%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 5.9% from the previous year's estimated figure.
Lockheed Martin LMT: The company has a vast portfolio of autonomous systems, including Indago 4, MORFIUS, Stalker UAS etc. LMT’s business unit Sikorsky’s MATRIX technology is an aircraft autonomy system that will one day enable helicopters to resupply forward forces on the future battlefield without any human pilots or crew on board.
LMT boasts a long-term earnings growth rate of 7.9%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 2.9% from the previous year's estimated figure.
Northrop Grumman NOC: It is a leader in autonomous systems and offers an impressive portfolio of UAVs, which include Global Hawk, MQ-4C Triton, Fire Scout, Bat UAS etc. In November 2023, Australia’s multi-intelligence MQ-4C Triton completed its first flight. Australia has placed an order for four such UAS.
NOC boasts a long-term earnings growth rate of 2.3%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 5% from the previous year's estimated figure.
Price Performance
In the past year, shares of KTOS have rallied 76.6% compared with the industry’s 25.9% rise.
Image Source: Zacks Investment Research
Zacks Rank
Kratos currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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