Kratos Defense & Security Solutions Inc. are trading higher Friday after U.S. Defense Secretary Pete Hegseth announced a sweeping policy change to fast-track drone production and deployment.

What To Know: Hegseth's directive reclassifies small drones, specifically Group 1 and 2 unmanned systems, as "consumable weapons," a departure from the Pentagon's traditional approach that treated them as high-value aircraft.

The change empowers colonels and Navy captains to procure and test small drones independently, bypassing long-standing bureaucratic processes. It also eliminates multiple legacy policies, opening the door for rapid field deployment of 3D-printed and commercial off-the-shelf drone technology.

The Department of Defense plans to fully integrate low-cost drones into all relevant military training by 2027. The changes are designed to give the U.S. an edge over global adversaries by accelerating innovation and field-readiness in unmanned warfare.

KTOS Price Action: Kratos Defense & Security Solutions shares were up 11.8% at $51.73 at the time of writing, according to Benzinga pro.

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