Why Kratos Stock Just Rocketed—And What Wall Street Isn’t Telling You

Another day, another meme stock defying gravity—but this one's got teeth.

Kratos Defense & Security Solutions (NASDAQ: KTOS) surged 14% in early trading today, leaving analysts scrambling to justify the move. The usual suspects—retail traders, defense sector tailwinds, or just good old-fashioned FOMO—are all taking credit.

The catalyst? Whisper numbers beat expectations

No official earnings release, no major contract win—just the Street playing catch-up with what crypto natives already know: speculative momentum waits for no one. Defense stocks are the new altcoins, apparently.

Short squeeze or sustainable rally?

With short interest hovering near 8% of float, this could be another case of hedge funds getting steamrolled by Reddit's army of armchair generals. Or maybe the market finally noticed Kratos' drone tech could be repurposed for... less conventional deliveries.

Either way, today's pop proves one thing: in 2025's market, fundamentals are just another narrative to pump before dumping. Just ask the bagholders of last quarter's 'AI revolution' plays.

BTIG is now big on the company

The person upping his recommendation on Kratos was BTIG's Andre Madrid, who has set a price target of $80 per share for the defense stock.

Image source: Getty Images.

According to reports, Madrid feels that several developments have swung in the defense company's favor recently. A major one he cited is the Marine Corps's MUX TACAIR unmanned aerial systems (UAS) program, for which the company was downselected. This portends quite well for Kratos's general UAS business.

The analyst also waxed bullish about the company's potential in other product segments, singling out categories such as hypersonics and microwave technologies.

Join the club

Madrid's upgrade is part of a trend among analysts, more than a few of whom have become more positive about Kratos's future lately. Earlier this week, a clutch of them raised their price targets on the shares, while one (Cannacord Genuity's Austin Moeller) initiated coverage with a buy rating.

This was to be expected, to a degree, as the company scored a double beat on its second-quarter earnings, which it reported last week. It particularly impressed the market with a 17% year-over-year increase in sales, not to mention topping the average analyst revenue estimate with full-year guidance of $1.3 billion.