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Goldman Sachs says combat has been “redefined” by Russia’s war on Ukraine, creating an opportunity for Kratos Defense and Security Solutions as the U.S. allocates more defense dollars for drones and missile systems. The firm upgraded the company, which specializes in unmanned systems and propulsion technology, to buy from neutral in a Sunday note, alongside a $52 per share price target. Goldman’s forecast implies about 13% upside from Friday’s $45.84 close. Shares have already surged nearly 74% in 2025. Analyst Anthony Valentini said that Russia’s war on Ukraine exemplified the need for cheap yet efficient weaponry. At the same time, he said, the Department of Defense could have a bigger appetite for that type of munitions to further cut costs without sacrificing quality. This also fits with President Donald Trump’s desire to trim spending, he said. “The Ukraine conflict proved that large volumes of low-cost, technologically acceptable systems can combat exquisite platforms at a fraction of the cost,” Valentini said. “We believe defense is in the early stages of a major structural change that will drive disruptive defense tech companies taking a larger share of global defense spending.” He added that Kratos has “been positioning itself for the future of warfare for years” by building low cost yet “technically acceptable” products that can be made at scale, which could benefit the stock. KTOS YTD mountain Kratos stock in 2025. “Kratos has strategically invested in areas of the defense supply chain that are critical to the future of warfare and are at a key inflection point,” the analyst added. “Funding is finally coming for drone programs, turbo jet and turbo fan engines are in high demand for UAS [unmanned aircraft systems] and missile systems, and both C5ISR [Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance] and space are continuing to grow at a fast clip.” The analyst said he sees multiple channels for “significant growth.” “The company has taken the approach of casting a wide net across many opportunities that are increasing in importance and ultimately demand,” he said. “Individually, each of these opportunities have the potential to redefine the company and could change the financial framework significantly.”
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