Freedom raises TP, maintains 'buy' on Mtron amid rising defense spending

Shares of Mtron Industries, a U.S. small-cap manufacturer of high-precision electronic components, now offer upside of more than 17%, as laid out in a Freedom Broker upgrade note. The company's participation in U.S. defense programs could expand amid rising budgets for defense, the analysts write.

Freedom Broker raised its target price for Mtron, which produces high-precision electronic components for the aerospace, defense, space, and communications sectors, by 14% to $81 per share and maintained its “buy” rating, according to the note (seen by Oninvest).

The new target implies upside of more than 17%. Shares closed at $69.00 apiece on Friday, falling 4.3% on the day. At the same time, Mtron stock has jumped nearly 30% year to date.

The analysts increased their target price after Mtron reported last Tuesday that fourth-quarter revenue rose 11.2% year over year to $14.2 million. The main contribution came from defense programs, including missile systems and precision-guided munitions, as well as the aviation segment (the company supplies components for most Airbus and Boeing platforms), Freedom writes.

The analysts also point to stronger liquidity. As of the end of 2025, the company held $20.9 million in cash, versus $12.6 million a year earlier.

In January, Mtron received $27.5 million from warrant exercises, and in March announced a rights offering for existing shareholders (five rights allow shareholders to purchase one share before the start of a general subscription).

This is intended “to address rapid changes in the defense sector,” the company said.

The total deal size has not yet been determined, but Mtron plans to offer the rights at a 10-12% discount to the average volume-weighted share price over the previous five days, according to the statement. Offering a discount is standard capital-raising practice, Freedom writes.

The small cap manufacturer plans to use the proceeds, among other things, for acquisitions, capacity expansion, and the development of new products. “We view the transaction as a proactive strengthening of the balance sheet amid an accelerating defense cycle and potential M&A deals,” Freedom writes.

Back in January 2025, U.S. President Trump said he intended to raise the military budget by two thirds to $1.5 trillion in 2027. Freedom calls this figure “exceptionally aggressive” and unlikely to be hit, but notes that defense spending in the U.S. will rise in any case, supporting companies across the supply chain, including Mtron.

The company could also benefit from a $10 billion increase, to $185 billion, in funding for the “Golden Dome” program, the analysts write. The project envisions the creation of a multilayered U.S. missile defense system, and Mtron supplies critical components, including for missile systems.

An additional factor supporting demand for defense solutions will be the current conflict in the Middle East, Freedom writes.

However, the analysts caution that the increase in defense spending in 2027 is a temporary factor rather than a new norm. As a result, they expect that after growth in 2026-2027, Mtron’s revenue growth could slow or even decline in 2028.