What Happened?
Shares of aerospace and defense company Kratos (NASDAQ: KTOS) jumped 5.1% in the morning session after 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.
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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 5 days ago when the stock gained 2.6% on the news that the stock's positive momentum continued as the company unveiled a new attack drone, building on investor optimism from a recent U.S. policy change that eased military drone export restrictions.
Kratos and its partner, the National Chung-Shan Institute of Science and Technology (NCSIST), launched the Mighty Hornet IV Attack UAV. The new unmanned vehicle showcased impressive capabilities, including Mach 0.8 speed and a service ceiling exceeding 35,000 feet. As part of the deal, Kratos planned to market the advanced drone internationally. The news landed on fertile ground, as sentiment had already been lifted by the U.S. government's decision to loosen export controls for military drones. This policy shift reclassified the vehicles to be treated more like fighter jets than missile systems, smoothing the path for sales to allied nations. The development also reflected a wider trend where smaller U.S. defense firms outshined larger competitors amid strong demand for versatile and cost-effective military technologies like AI-driven drones.
Kratos is up 222% since the beginning of the year, and at $84.95 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 $4,589.
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