Canaccord Genuity raised its price objective on Kratos Defense & Security Solutions (NASDAQ:KTOS) to $125 from $120 while maintaining a Buy recommendation, citing the company's latest quarterly and full-year results.
Quarterly performance
For the fourth quarter of fiscal 2025 Kratos reported revenues of approximately $345 million, representing year-over-year growth of 22%. Adjusted EBITDA for the quarter was $34 million, an increase of 35% versus the prior-year period. The fourth-quarter top line outperformed Canaccord Genuity's estimate by 3.1% and consensus by 5.5%, while adjusted EBITDA beat Canaccord's projection by 6.6% and consensus by 5.9%.
In a separate line-item, Kratos reported fourth-quarter earnings per share of $0.18, marginally ahead of the $0.17 expected, and a revenue figure of $345.1 million versus a consensus forecast of $327.63 million. These results collectively point to a quarter that topped both EPS and revenue forecasts.
Full-year fiscal 2025 results and segment dynamics
For the full fiscal year 2025, Kratos recorded revenues of $1.35 billion, up 18.5% year-over-year and up 16.6% on an organic basis. The company reported an adjusted EBITDA margin of 8.9%, which translates to roughly $120 million in adjusted EBITDA, an increase of 13.4% from the prior year. On an organic basis overall revenues rose 20%, driven principally by the Government Solutions business, which saw 22.2% organic growth.
Within Government Solutions, organic demand strength was concentrated in several subsegments: Defense Rocket Systems grew organically by 47.4%, Microwave Products by 32.4%, and Space, Training and Cyber by 22.7%. The Unmanned Systems segment expanded organically by 12.1%.
Profitability at the segment level showed improvement as well. Government Solutions operating income rose 57% to approximately $17 million, while adjusted EBITDA from that segment increased 23% to $27.7 million. The Unmanned Systems business recorded a substantial rebound in operating performance, with operating income growing 271% to $1.9 million and adjusted EBITDA expanding 146% to $6.4 million.
Analyst commentary and valuation notes
Canaccord's move to lift its price target followed the quarterly beats and the year-over-year margin expansion. The firm maintained a Buy rating alongside the new $125 target. Separately, Citizens reiterated a Market Outperform rating for Kratos and set a price target of $125, citing growth potential across unmanned systems, space and satellite activities, and microwave electronics.
According to InvestingPro Tips noted in company commentary, Kratos currently trades at elevated earnings and EBITDA valuation multiples, but analysts expect continued profitability through the year. The InvestingPro commentary also indicates additional research and tips are available for investors seeking deeper insight into the company.
What this means for markets and sectors
The results highlight demand strength across defense-related manufacturing and technology subsegments - notably rocket systems, microwave electronics and space-related services - alongside recovery in unmanned systems. Those trends bear relevance for investors and participants in defense, aerospace, and specialized electronics markets as they assess backlog conversion and margin trajectories.
Note: This article presents company-reported figures and analyst actions as disclosed by the company and the reporting firms. No additional forecasts or third-party data have been introduced beyond those reported.