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Watchlist 2026 · Defense & Defense-Tech
AVAV · KTOS · RKLB · LUNR · PL · DRS · KRMN · RCAT · UMAC · ONDS
Defense: the 10 hottest stocks of July 2026
Ten small and mid-cap names across defense and defense-tech, screened for momentum, chart position and base. For each one: a mini chart, a short explainer and the real analyst price targets with sources.
Theme of the month
Drones, counter-UAS and space: defense spending fuels the defense-tech names
Rising budgets for drones and counter-drone systems, a push to fund domestic US drone makers and a ramp in space launch: these are the currents moving the small and mid caps below. The moves are often fast and volatile.
00How this list was built
This is not a “stocks to buy” list. It is a snapshot of the ten defense names that, in early July 2026, are the most talked-about and the most in motion among small and mid caps. The screen looks at three things: recent momentum (reactions to earnings, contracts, sector news), chart position relative to the 52-week range, and how solid the base is that the stock is moving from. It is not a quality judgment on the company nor a forecast.
For each stock you will find the real analyst price targets: these are the opinions of professional analysts (banks and brokers), reported as market data with the firm and the date, not recommendations from Merlintrader. Sources are listed at the end. Prices and market caps are indicative as of early July 2026 and should be re-checked live before any decision.
Data note: the consensus (average rating, number of analysts, average target) and the single targets are current as of the dates shown next to each. Some consensus figures on smaller names are a few weeks old. Nothing on this page is made up: where a figure could not be verified, it was left out.
01The ten at a glance
Prices and market caps indicative as of early July 2026. “Avg target” = analyst consensus; “Upside” = the gap between the average target and the listed price (arithmetic, not a forecast).
| # | Ticker | Company | Price | Mkt cap | Consensus | Avg target | Upside* |
|---|---|---|---|---|---|---|---|
| 1 | AVAV | AeroVironment | ~$188 | ~$9.5B | Buy (20) | $258.61 | ~+38% |
| 2 | KTOS | Kratos Defense | ~$53 | ~$9.9B | Buy (20) | $112.20 | ~+112% |
| 3 | RKLB | Rocket Lab | ~$103 | ~$57B | Buy (18) | $111.86 | ~+9% |
| 4 | LUNR | Intuitive Machines | ~$21 | ~$4.5B | Buy (9) | $40.78 | ~+95% |
| 5 | PL | Planet Labs | ~$32 | ~$11.3B | Buy (11) | $39.80 | ~+26% |
| 6 | DRS | Leonardo DRS | ~$43 | ~$11.5B | Buy (10) | $52.90 | ~+23% |
| 7 | KRMN | Karman Holdings | ~$56 | ~$7.4B | Buy (11) | $105.60 | ~+90% |
| 8 | RCAT | Red Cat Holdings | ~$10.5 | ~$1.6B | Strong Buy (6) | $22.00 | ~+108% |
| 9 | UMAC | Unusual Machines | ~$23.5 | ~$1.1B | Strong Buy (6) | $29.50 | ~+26% |
| 10 | ONDS | Ondas Holdings | ~$7.9 | ~$4.0B | Strong Buy (8) | $20.13 | ~+154% |
| ★ | PDYN | Palladyne AI · BONUS | ~$5.9 | ~$274M | Buy (4) | $11.25 | ~+91% |
*Upside is purely arithmetic vs the indicative price, not a forecast. A large upside often reflects large risk.
02AeroVironment Nasdaq: AVAV
Daily chart · Source: Finviz
Price
~$188
Market cap
~$9.5B
Consensus
Buy
20 analysts
Avg target
$258.61
~+38%
AeroVironment is the purest play on drones, loitering munitions and counter-UAS systems. After its late-June earnings the stock exploded (up more than 20% in a single session) and kept climbing on news of a $500M US Army counter-UAS IDIQ (the Titan program). Revenue more than doubled year over year and funded backlog is growing fast. On the chart it still sits around the middle of its 52-week range ($135-$418): strong momentum, but still well below the highs.
Analyst targets: Canaccord Genuity (Austin Moeller) — Buy, $280 (Jul 1, 2026, trimmed from $300); Wedbush (Sam Brandeis) — initiated Outperform, $250 (Jun 30, 2026). Consensus: Buy across 20 analysts, average target $258.61 (range $166-$450).
03Kratos Defense & Security Nasdaq: KTOS
Daily chart · Source: Finviz
Price
~$53
Market cap
~$9.9B
Consensus
Buy
20 analysts
Avg target
$112.20
~+112%
Kratos is the sector’s cross-cutting “merchant arms supplier”: target drones, Spartan engines for missiles and loitering munitions, hypersonics. After a heavy pullback from its highs (~$134) the stock is trying to turn back up, supported by new contracts (a $36M air-defense award on July 2) and several upgrades. On the chart it is still well below its 52-week highs ($42-$134): the base is still forming and the rebound is early.
Analyst targets: J.P. Morgan (Seth Seifman) — upgrade to Overweight, $82 (Jun 16, 2026); Wedbush — initiated Outperform, $85 (~Jul 1, 2026). Cautionary note: UBS (Gavin Parsons) — Hold, target cut to $60 (Jun 29, 2026). Consensus: Buy across 20 analysts, average target $112.20 (range $75-$150).
04Rocket Lab Nasdaq: RKLB
Daily chart · Source: Finviz
Price
~$103
Market cap
~$57B
Consensus
Buy
18 analysts
Avg target
$111.86
~+9%
Rocket Lab is the leading listed pure-play on small/medium space launch and the most-cited SpaceX alternative. The stock has run to ~$151 (an all-time high), pulled back, then jumped again (+16% on June 29). The current catalyst is the announced ~$8 billion acquisition of Iridium (IRDM), which would add recurring satellite-communications revenue. To be clear: at ~$57 billion in market cap, RKLB is now a large cap, no longer a small/mid, and it stays highly volatile (beta ~2.5, 52-week range $26-$151).
Analyst targets: Citizens (Trevor Walsh) — Outperform, $130 (from $95); Roth Capital (Suji Desilva) — Buy, $130 (from $100); Craig-Hallum (Jeff Van Rhee) — Buy, $120; BofA — $115. Consensus: Buy across 18 analysts, average target $111.86.
05Intuitive Machines Nasdaq: LUNR
Daily chart · Source: Finviz
Price
~$21
Market cap
~$4.5B
Consensus
Buy
9 analysts
Avg target
$40.78
~+95%
Intuitive Machines is a pure-play on space infrastructure and lunar landers, tied to NASA’s Artemis/CLPS programs. After a mid-June drop, the stock rebounded on a fresh NASA CLPS award (a $148M lunar mission announced July 1) and on national-security contracts. On the chart it is about 55% below its 52-week high ($8-$47): a very wide base, with momentum driven by awards.
Analyst targets: Roth MKM (Sujeeva De Silva) — Buy, $75 (May 28, 2026, the Street high); Deutsche Bank (Edison Yu) — Buy, $34 (May 20, 2026). Consensus: Buy across 9 analysts, average target $40.78 (range $11-$75).
06Planet Labs NYSE: PL
Daily chart · Source: Finviz
Price
~$32
Market cap
~$11.3B
Consensus
Buy
11 analysts
Avg target
$39.80
~+26%
Planet Labs runs a constellation of satellites for daily Earth imaging, at the intersection of defense/intelligence and AI. After a huge run over the past twelve months it corrected (~-22%) on softer-than-expected full-year guidance, but quarterly revenue is still growing fast (+42% year over year) and eight-figure contracts with the NGA (US geospatial intelligence) support the thesis. 52-week range $6-$52.
Analyst targets: Wedbush (Daniel Ives) — Outperform, $50 (Jun 5, 2026); Craig-Hallum (Jeff Van Rhee) — Buy, $49 (from $36, Jun 5, 2026). Consensus: Buy across 11 analysts, average target $39.80 (range $22-$53).
07Leonardo DRS Nasdaq: DRS
Daily chart · Source: Finviz
Price
~$43
Market cap
~$11.5B
Consensus
Buy
10 analysts
Avg target
$52.90
~+23%
Leonardo DRS is the most “defensive” name on the list: naval electronics and counter-drone systems, with a very low beta (~0.2) and a more orderly trend than the others. Its Tenum 640 thermal camera, a maritime counter-UAS package and a $533M Navy contract support growth; FY26 guidance was raised after a first-quarter beat. The stock is near its 52-week highs ($32-$51). Next earnings on July 30.
Analyst targets: Canaccord (Austin Moeller) — Buy, $54 (from $52); BofA — Buy, $55 (from $50). Consensus: Buy across 10 analysts, average target $52.90.
08Karman Holdings NYSE: KRMN
Daily chart · Source: Finviz
Price
~$56
Market cap
~$7.4B
Consensus
Buy
11 analysts
Avg target
$105.60
~+90%
Karman Holdings is a pure-play supplier to hypersonics, missile defense and space launch, among the suppliers to Blue Origin/New Glenn. It announced more than $1 billion in multi-year commitments from four key customers, but the stock struggled after earnings and a secondary share offering in late May (a dilution factor). On the chart it is well below its 52-week highs ($43-$118).
Analyst targets: Citi (John Godyn) — Buy, $76 (cut from $97, ~Jul 1, 2026, with an upside “90-day catalyst watch”); Piper Sandler (Clarke Jeffries) — Overweight, $114 (from $127). Consensus: Buy across 11 analysts, average target $105.60.
09Red Cat Holdings Nasdaq: RCAT
Daily chart · Source: Finviz
Price
~$10.5
Market cap
~$1.6B
Consensus
Strong Buy
6 analysts
Avg target
$22.00
~+108%
Red Cat makes made-in-USA tactical drones (Black Widow, Hellcat) and unmanned surface vehicles. It is one of the most direct beneficiaries of the administration’s push to fund domestic drones, with orders from the Army and Japan. Revenue is growing fast, but a $200M capital raise in May weighed on the stock (dilution). A high-beta small cap, roughly in the middle of its 52-week range ($6-$19).
Analyst targets: Roth MKM (Craig Irwin) — initiated Buy, $25 (Jun 1, 2026, the high); Clear Street (Brian Dobson) — Buy, $19 (from $22, Jun 8, 2026, citing dilution). Consensus: Strong Buy across 6 analysts, average target $22.00 (range $20-$25).
10Unusual Machines NYSE American: UMAC
Daily chart · Source: Finviz
Price
~$23.5
Market cap
~$1.1B
Consensus
Strong Buy
6 analysts
Avg target
~$29.50
~+26%
Unusual Machines makes NDAA-compliant (made-in-USA) drone components, positioned exactly as the Pentagon weighs funding or taking stakes in domestic drone companies. The stock jumped in late May on the news (a session up more than 50%) and joined the Russell 2000 on June 29. A very volatile small cap, 52-week range $7-$34.
Analyst targets: Roth MKM (Craig Irwin) — Buy, $40 (from $25, Jun 2, 2026); Needham (Austin Bohlig) — Buy, $30 (from $22, Jun 11, 2026). Consensus: Strong Buy across 6 analysts, average target about $29.50 (range $22-$40).
11Ondas Holdings Nasdaq: ONDS
Daily chart · Source: Finviz
Price
~$7.9
Market cap
~$4.0B
Consensus
Strong Buy
8 analysts
Avg target
$20.13
~+154%
Ondas is a play on autonomy and counter-UAS for defense, backed by Palantir. It offers anti-drone systems (Sentrycs, integrated with Lockheed’s Sanctum), loitering munitions and counts more than $150 million in new second-quarter orders. Extremely volatile (beta ~2.6): it ran to ~$15 and then pulled back toward ~$8, 52-week range $1.7-$15.3. Note: the consensus here is current as of late May, the oldest in the group.
Analyst targets: Lake Street (Max Michaelis) — Buy, $19 (May 28, 2026); Needham (Austin Bohlig) — Buy, $23 (May 19, 2026). Consensus: Strong Buy across 8 analysts, average target $20.13 (range $16-$25).
BONUSPalladyne AI Nasdaq: PDYN
Daily chart · Source: Finviz
Price
~$5.9
Market cap
~$274M
Consensus
Buy
4 analysts
Avg target
$11.25
~+91%
The bonus is the most speculative name on the list: Palladyne AI (formerly Sarcos) is a micro cap building autonomy and AI software for robots and drones, with defense applications (autonomous drones and robotics). Revenue is still small but accelerating fast (FY2026 estimate ~$24.6M, more than +360% year over year) and the company is loss-making. Coverage is thin and views diverge widely: from a Jefferies Hold at $7 up to a $15 Northland target. At ~$5.9 the stock trades well below the Street’s high target. A high-risk name, to be treated as such.
Analyst targets: Alliance Global Partners (Brian Kinstlinger) — Buy, $12 (Jun 30, 2026); Lake Street (Max Michaelis) — Buy, $11 (Jun 29, 2026); Northland (Michael Latimore) — Buy, $15 (Jun 17, 2026); Jefferies (Greg Konrad) — Hold, $7 (cut from $8, May 6, 2026). Consensus: Buy across 4 analysts, average target $11.25 (range $7-$15).
12Risks common to these names
Small and mid-cap defense names share some recurring risks. Dilution is common: several of these (RCAT, UMAC, ONDS, KRMN) have issued shares to fund growth, and more raises are possible. Contract concentration makes revenue lumpy: a single award can move the stock, and so can the lack of one. Volatility is high (beta often above 1, in some cases above 2), so moves in both directions are large. Finally, many of these price targets already bake in high expectations: if results disappoint, the pullback can be fast.
Bottom line: potential upside and risk go together here. Analyst targets are a reference, not a guarantee, and can be revised quickly after earnings, contracts or capital raises.
Sources
- AeroVironment (AVAV) — StockAnalysis · Forecast & Price Targets
- Kratos (KTOS) — StockAnalysis · TipRanks/TheFly (Wedbush)
- Rocket Lab (RKLB) — StockAnalysis · MarketBeat
- Intuitive Machines (LUNR) — StockAnalysis
- Planet Labs (PL) — TipRanks/TheFly (Craig-Hallum)
- Leonardo DRS (DRS) — TipRanks/TheFly (Canaccord) · TipRanks/TheFly (BofA)
- Karman Holdings (KRMN) — TipRanks/TheFly (Citi) · TipRanks/TheFly (Piper Sandler)
- Red Cat (RCAT) — StockAnalysis · TipRanks/TheFly (Clear Street)
- Unusual Machines (UMAC) — TipRanks/TheFly (Roth) · TipRanks/TheFly (Needham)
- Ondas (ONDS) — StockAnalysis
- Palladyne AI (PDYN) — StockAnalysis · Forecast & Price Targets
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Disclaimer. For educational and informational purposes only. Not financial advice nor a recommendation to buy, sell or hold, consistent with SEC (USA) guidance. The price targets cited are the opinions of third-party analysts reported as market data, not forecasts or recommendations from Merlintrader. The securities mentioned are volatile and involve substantial risk, including loss of principal. Prices and data should be re-checked live. Always do your own research and consult a licensed advisor. Full disclaimer: merlintrader.com/disclaimer.
© 2026 Merlintrader · Educational use only · Defense & Defense-Tech