What Happened?
Shares of aerospace and defense company Kratos (NASDAQ: KTOS) jumped 4.2% in the afternoon session after RBC raised its price target on the company. Also Kratos was selected as the exclusive U.S. manufacturer for Elroy Air's Chaparral cargo drone.
The investment firm RBC increased its price target on the stock to $90 from $65 while keeping an Outperform rating.
In separate news, the uncrewed aircraft specialist was picked by Elroy Air for an initial five-year contract to speed up high-volume production of its Chaparral drone. This hybrid-electric aircraft was designed to carry a 135kg payload in an underslung cargo pod over a range of 300 miles for both commercial and military use.
Adding to the day's positive developments, Kratos also announced it would display its advanced unmanned jet drones at the upcoming Marine Corps Air Station Miramar Air Show.
The shares closed the day at $84.29, up 3.9% from previous close.
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What Is The Market Telling Us
Kratos’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 5.1% on the news that the company announced a series of positive developments, including a new manufacturing partnership with Elroy Air and the start of altitude testing for a new military engine with GE Aerospace.
Kratos was chosen by Elroy Air as its exclusive U.S. partner to make the Chaparral, a hybrid-electric autonomous vertical takeoff and landing (VTOL) cargo drone, under a new five-year deal. In a separate announcement, Kratos and GE Aerospace started altitude testing on their GEK800 small engine, designed for the next generation of affordable unmanned aerial systems. Adding to the good news, the company also announced its upcoming addition to the S&P MidCap 400 Index, a move reflecting its recent growth and market recognition.
Kratos is up 220% since the beginning of the year, and at $84.46 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 $4,438.
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