New York, Jan 9, 2026, 10:04 (EST) — Regular session
Kratos Defense & Security Solutions shares climbed about 6% in early New York trading on Friday, up $6.27 at $110.31 as of 9:49 a.m. EST. The stock swung between $104.76 and $111.59.
The move followed a Thursday company statement that Northrop Grumman had been selected for the U.S. Marine Corps’ MUX TACAIR Collaborative Combat Aircraft program and would pair its mission kit and Prism autonomy software with Kratos’ XQ-58A Valkyrie. Collaborative Combat Aircraft, or CCA, refers to uncrewed aircraft designed to fly alongside crewed fighters. (Kratos Defense)
Breaking Defense reported the award is an Other Transaction Agreement — a flexible deal often used for prototypes outside the standard contracting lane — with an initial value of $231.5 million and a 24-month performance period. Northrop vice president Krys Moen told the publication milestones were not releasable. (Breaking Defense)
The contract news landed as investors reprice the defense sector on shifting policy signals out of Washington. President Donald Trump this week issued an executive order targeting dividends and share buybacks at major defense contractors and floated a fiscal 2027 defense budget of $1.5 trillion, up from $901 billion approved for 2026, Reuters reported. (Reuters)
Kratos, which said it does not repurchase shares or pay dividends, used a separate release to back the White House’s reinvestment tilt. “At Kratos, every dollar we earn is viewed through the lens of readiness and capability,” Chief Executive Eric DeMarco said. (Kratos Defense)
Northrop was up about 1.6% and Lockheed Martin gained about 3.6%, while drone maker AeroVironment added about 2%.
Still, prototype work can be lumpy, and boards are gaming out how far the payout clampdown can go in practice. Morgan Stanley analyst Kristine Liwag called the administration’s budget-and-restrictions combo “carrots and sticks,” while a federal contracting lawyer warned companies could face threatened payment holds and terminations even if disputes get dragged into court, Reuters reported. Moody’s senior vice president David Rogovic said a debt-funded 50% jump in defense spending would be hard to offset and would likely widen already large U.S. deficits. (Reuters)
The next hard catalyst for KTOS is its quarterly report, expected on Feb. 25, according to Zacks, when investors are likely to press management for more detail on MUX TACAIR timing, funding and what a production ramp for Valkyrie would actually look like. (Zacks)
