Movers and SHAKERS
Thursday, July 23, 2020
Kratos Defense & Security (KTOS)
Acquisition Rumors Drive Shares Up 11%
Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Acquisition Rumors. Yesterday, various news sources discussed Lockheed Martin as a potential acquiror of Kratos. According to the reports, Lockheed Martin's new CEO James Taicliet said in a Bloomberg interview published after the company's earnings call that the company's focus for M&A will be on "pure-play defense," although the collapse in air travel has him "shying away" from any expansion into commercial aerospace, Dealreporter said. Back in mid-2019, the news service previously said Lockheed "could be a natural suitor for companies like Mercury Systems (MRCY) or Kratos Defense & Security Solutions (KTOS)," the report noted, adding that based on Taicliet's comments that Kratos "may be the more likely of the two."
Our Thoughts. Kratos has long been the subject of acquisition rumors and we do expect the long-term outcome for the Company is to be acquired by one of the Primes. A year ago, KTOS shares were above $24. Today, awards are closer but the stock is only at $17.85. We think management would need to see a price in excess of ...
This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.