RBC lifts PT on US defense firms, citing AI and missile growth

Ducommun Incorporated

03/07/2025 12:07

** Shares of U.S. Aerospace and defense companies AeroVironment AVAV.O, Karman Holdings KRMN.N and  Kratos Defense & Security Solutions KTOS.O all up ~1% in premarket trading

** RBC Capital Market raises PT on AVAV to $275 from $200, KRMN to $51 from $44, and KTOS $50 from $38

** Brokerage says small-cap defense tech firms are likely to keep outperforming, helped by higher FY26 defense spending and strong positions in fast-growing markets like AI and missiles

** RBC expects FY26 U.S. defense spending growth and a shift to cheaper, disruptive tech benefiting small-cap defense firms over larger contractors

** Up to last close, AVAV, and KTOS stock had risen ~60% and ~64% respectively, and KRMN had fallen ~10.2% YTD

Companies
Rating
Current PT
Previous PT
AeroVironment, Inc
Outperform
$275
$200
Ducommun Inc
Outperform
$95
$72
Karman Holdings Inc
Outperform
$51
$44
Kratos Defense & Security Solutions
Inc
Outperform
$50
$38
Mercury Systems Inc
Sector Perform
$55
$50

 (Reporting by Akriti Shah in Bengaluru)

 ((akriti.shah@thomsonreuters.com))