UPDATE: Jefferies Initiates Kratos Defense & Security at Hold

Jefferies & Company has published a research report on on Kratos Defense & Security KTOS and has initiated coverage on the company with a Hold rating and $7 price target. In the report, Jefferies writes, "We initiate coverage of KTOS with a Hold rating. KTOS has been transformed into a pure-play security and defense company through the acquisition of niche companies with broad defense exposure. However, lack of synergies and focus in the product portfolio coupled with a difficult operating environment should cause the shares to perform in line with the market. KTOS' eight acquisitions since 2010 serve a diverse set of markets: cyber, SATCOM, electronic warfare, containers, surveillance systems and training simulators. Most of the acquisitions have very distinct technologies and customers that can limit the ability to find revenue synergies across the product portfolio. The markets range in size from a couple of hundred millions dollars for C2 containers to the $10 billion cyberwarfare market. Several of its markets, including much of the legacy business, are expected to have low growth or may experience contraction." Kratos Defense & Security closed yesterday at $6.43.