Raymond James Initiates Coverage on Karman Holdings with Strong Buy, $100 PT

Raymond James Initiates Coverage on Karman Holdings with Strong Buy, $100 PT

Raymond James & Associates has initiated coverage on Karman Holdings Inc. (KRMN) with a "Strong Buy" rating and a price target of $100 per share. This follows the company's strong performance since its initial public offering (IPO) in February 2025.

Karman Holdings, a provider of highly engineered subsystems for defense and space programs, has seen significant growth since its IPO. The company's stock has soared 140% from its $22 IPO price, significantly outperforming the S&P 500 Index. In the second quarter of 2025, Karman reported revenue of $115.1 million, a 35% year-over-year increase. Adjusted EBITDA rose 29% to $35.3 million, and adjusted earnings per diluted share more than tripled over the previous year [1].

The company's growth is driven by its diverse portfolio, which includes hypersonics and strategic missile defense, space and launch, and tactical missiles and integrated defense systems (IDS). Revenue in these segments grew 22%, 39%, and 46% respectively in the second quarter. Karman's gross margin improved to 41% through manufacturing efficiencies, indicating a transition from early-stage contract wins to steady, repeatable revenue [1].

Raymond James analysts noted that Karman's strong performance is supported by robust defense spending, growing interest in space projects, and the Golden Dome missile defense program. The company has also strengthened its strategic position through acquisitions, including the purchase of Industrial Solid Propulsion and Metal Technology Inc. [2].

Looking ahead, Karman expects sustained organic growth from hypersonics, missile defense, and space launches, as well as accretive acquisitions to expand capabilities and deepen relationships with prime contractors. The company's backlog for 2026 is already being built, positioning it for long-term growth [1].

Investors should also note that Karman has a strong balance sheet, with $27.4 million in cash and equivalents at the end of the second quarter. Additionally, President Donald Trump's One Big Beautiful Bill Act provides billions of dollars in funding that aligns with Karman's business [1].

The "Strong Buy" rating from Raymond James, along with the $100 price target, reflects the analysts' bullish view on Karman's prospects. The stock has exceeded its average target price of $53.25, with the Street-high estimate of $60 suggesting potential upside of 8.9% over the next 12 months [1].

References:
[1] https://finance.yahoo.com/news/1-growth-stock-under-100-120002141.html
[2] https://finance.yahoo.com/news/karman-holdings-inc-krmn-nearly-182541501.html