ASC Signal Acquisition. Yesterday, Kratos announced the acquisition of ASC Signal for $35 million. ASC is a manufacturer of high-performance, highly engineered antenna systems for satellite communications, radar, electronic warfare, and high-frequency applications. While details of the business size were not provided, we would note the business was running at a $50 million revenue rate back in 2016. Notably, the Department of Justice required the sale of ASC in order for Communications and Power Industries to proceed with its proposed acquisition of General Dynamics SATCOM Technologies, Inc. Synergies and Expansion. The acquisition brings numerous synergies with Kratos' existing core space business and expands Kratos' industry-broadest offering of advanced products across the ground station segment. ASC antennas are used in a variety of mission-critical space applications, ranging from Telemetry, Tracking & Command to satellite communications and earth sensing and observation for military and commercial satellites in all orbits.High Growth Area. With some 50,000 satellites proposed to be launched over the next 10 years, ground station equipment is expected to be a high-growth market, with estimates of double digit CAGR over the next five years. For example, the 4,400 satellite Starlink constellation reportedly would require 123 ground station locations and 3,500 gateway antennas alone. Directed Energy Award. Also yesterday, Kratos announced it has been awarded a $46 million Other Transaction for Prototype Agreement to support the U.S. Army Rapid Capabilities and Critical Technologies Office. The new award has a three year period of performance. The prototype project is to establish a Directed Energy Testbed to accelerate military development capability in the focus areas of High Energy Laser and/or High Power Microwave systems. Air and Missile Defense military utility will be demonstrated with a concentration on countering Unmanned Aerial Systems using HEL and/or HPM on ground-based and airborne platforms.Maintaining Outperform Rating. We are maintaining our Outperform rating and $23 twelve month price target on KTOS shares.Read More >>