Investing.com — Cantor Fitzgerald started coverage of U.S. defense‑technology stocks, giving an Overweight rating to AIRO Group, AeroVironment (NASDAQ:AVAV) and Kratos Defense & (NASDAQ:KTOS) Security and Redwire.
Analysts set price targets of $35 for AIRO Group, $335 for AeroVironment, $60 for Kratos and $28 for Redwire.
Kratos was flagged as the “Top Pick” given what Cantor called a clear path of X‑58 scaling and rapid growth of microwave electronics and munitions, which it believes can translate into the fastest earnings and share‑price gains among the quartet.
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The brokerage groups the companies in a broader “defense‑tech basket,” arguing demand for drones, directed‑energy systems and space‑based services should rise as governments respond to heightened security threats.
While current valuations look expensive versus historical norms, about 1–3 times enterprise value to sales and 10–16 times EV/EBITDA, Cantor said recent share‑price strength after equity raises suggests investors are again willing to pay up for businesses with “multi‑decade growth visibility.”
Cantor’s thesis rests on what it calls a “Theory of Deterrence Relativity,” in which technologies that compress the decision‑making cycle on the battlefield are likely to win budget share.
The note argues that drones, software and directed‑energy weapons “flatten combat space‑time” and therefore “will always outgrow the technology that is behind it.”
Potential catalysts listed include, AIRO’s municipal eVTOL programme, AeroVironment’s progress in munitions and air‑defence systems, Kratos’ scaling of the X‑58 unmanned platform and electronics pipeline; and Redwire’s expansion in space‑based intelligence services.
Risks typical of hardware makers like engineering delays, cost overruns and regulatory scrutiny were also listed by the analyst as well as possible legal liabilities if autonomous systems generate “negative externalities.”
The brokerage sees defence tech benefiting from a multi‑year upswing in U.S. and allied defence budgets, positioning the sector as both “defensive and long‑duration” in a slowing economic environment.
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