KTOS - Kratos Defense Security (KTOS) - Business Continues To Come In

$50 Million Award. Yesterday, Kratos announced the receipt of an approximately $50 million contract value increase from a National Security customer for an existing C5ISR program. Kratos supplies the customer with specialized products, hardware, engineering and other services and deliverables.And $15 Million for Drone Support. Kratos also received approximately $15 million in contract awards for logistics support, spares, consumables, and support needed for the growing demand for Kratos' customer drone system operations. The awards are a reflection of the pent-up demand for increased operational missions, which should bode well for Kratos.Strong 4Q for OpenSpace. Kratos's OpenSpace quantum and OpenSpace Spectral product lines were sold to 25 customers in 4Q21, supporting the industry's continued evolution to dynamic, digital ground systems. According to John Heskett, CTO of Kratos OpenSpace customer Kongsberg Satellite Services, "...there is no question any longer that software can replace hardware reliably in ground systems." The switch to software from hardware should bode well for Kratos going forward.CR Extended? It appears the CR will drag on. Monday, House Appropriations Committee Chair Rosa DeLauro introduced a short-term bill that would allow the government to remain funded through March 11th. As we have noted previously, ongoing CRs do no favors for Kratos or other government contractors.Compelling Risk/Reward. We believe the current price level presents investors with a compelling risk/reward opportunity. We continue to believe it is a question of when, not if. We are maintaining our Outperform rating and $30.00 12-month price target. We continue to believe in the long-term prospects of Kratos and believe the Company to be well positioned to capitalize on new and emerging trends in defense. Read More >>