RBC Capital Markets analysts believe key programs, such as Golden Dome and space communications and operations, will continue to support the recent strength in the defense tech stocks.
In a research note published on Thursday, the analysts stated they continue to favor Karman Space & Defense (NYSE: KRMN), AeroVironment (NASDAQ:AVAV) Inc, and Kratos Defense & Security Solutions Inc (NASDAQ: KTOS) in the space.
“While Golden Dome is ramping, procurement reform at the Space Force is gaining traction, and we believe scarcity value will remain a key catalyst for the defense tech stocks,” the RBC analysts wrote.
They increased their target prices on AeroVironment to $330 per share from $300, Karman to $78 from $57, and Kratos to $90 from $65.
The analysts noted that while a potential government shutdown poses a risk to calendar 4Q 2025 bookings and free cash flow, the underlying demand drivers remain in place, and they believe investor sentiment will continue to favor the defense tech firms relative to the defense primes.
Karman Space & Defense stock rose 0.8% to $67.47, while AeroVironment shares edged up 0.1% to $301.95, and shares of Kratos Defense & Security Solutions gained 4% to $84.42 in late afternoon trading on Thursday.