New York, Jan 10, 2026, 21:10 EST — Market closed.
Shares of Kratos Defense & Security Solutions (KTOS) ended Friday at $113.70, gaining 9.3% after fluctuating between $104.65 and $115.45. The stock has surged roughly 43% since closing on Jan. 2, with about 6 million shares changing hands Friday. (Nasdaq)
The recent surge came after a defense-sector rally sparked by President Donald Trump’s proposal to boost the 2027 U.S. military budget to $1.5 trillion — well above the $901 billion set for 2026 — and his suggestion to cap dividends and buybacks unless contractors accelerate production. Lockheed Martin climbed 4.3%, Northrop Grumman added 2.4%, and Kratos soared 13.8% on Thursday. (Reuters)
Kratos positioned itself as aligned with that trend on Thursday, backing policies that favor reinvestment instead of shareholder returns. The company confirmed it neither does stock buybacks nor pays dividends. CEO Eric DeMarco emphasized the firm’s goal is “not financial engineering.” (Kratos Defense)
Kratos also announced that Northrop has been chosen to quickly develop the Marine Corps’ first Collaborative Combat Aircraft (CCA). These are pilotless “wingmen” meant to fly alongside crewed jets, built around Kratos’ XQ-58A Valkyrie airframe. Steve Fendley, head of Kratos’ unmanned systems division, said the goal is to produce a “high capability” CCA “at a price point that enables” mass deployment. (Kratos Defense)
Breaking Defense reported the award comes as an Other Transaction Agreement, or OTA—a Pentagon contract format designed to speed things up compared to standard procurement deals. The OTA is initially valued at $231.5 million with a 24-month performance window. (Breaking Defense)
Analysts jumped on the news. B. Riley bumped up its price target on Kratos to $128 from $105, maintaining its buy rating. The boost reflects potential gains tied to the administration’s hint at a 50% increase in the initial FY2027 defense budget to $1.5 trillion, according to The Fly. (TipRanks)
Truist raised its price target to $135 from $125, maintaining a buy rating. The firm sees the aerospace and defense sector as generally promising for 2026 but pointed out that smaller defense-tech stocks carry stretched valuations. (TipRanks)
The situation isn’t one-sided. The budget still needs Congressional approval, and Kratos’ Marine Corps program remains in development. The company hasn’t disclosed any expected revenue from a Northrop-led contract. According to a Form 4 filed on Jan. 9, David M. Carter, president of Kratos’ DRSS division, sold 12,123 shares between Jan. 7-8, following a 10b5-1 plan established last June. (SEC)
U.S. markets remain closed until Monday, putting the spotlight on any updates about the Marine Corps initiative and fresh clues on Pentagon spending tied to Trump’s plan. Kratos is set to release its next earnings report on Feb. 25, according to Zacks. (Zacks)
