Kratos Defense & Security Solutions (NASDAQ:KTOS) Stock Price Down 5.7% Following Analyst Downgrade

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) shares traded down 5.7% during mid-day trading on Friday after B. Riley Financial lowered their price target on the stock from $128.00 to $91.00. B. Riley Financial currently has a buy rating on the stock. Kratos Defense & Security Solutions traded as low as $40.28 and last traded at $41.09. Approximately 3,407,232 shares traded hands during mid-day trading, a decline of 22% from the average session volume of 4,354,867 shares. The stock had previously closed at $43.59.

Several other equities research analysts also recently weighed in on the stock. Jefferies Financial Group downgraded shares of Kratos Defense & Security Solutions from a “buy” rating to a “negative” rating in a research report on Monday, October 19th. Truist Financial reduced their price target on shares of Kratos Defense & Security Solutions from $135.00 to $104.00 and set a “buy” rating on the stock in a research report on Thursday, August 13th. Rothschild & Co Redburn began coverage on Kratos Defense & Security Solutions in a report on Tuesday, October 6th. They issued a “buy” rating and a $70.00 price objective for the company. Canaccord Genuity Group upped their price objective on Kratos Defense & Security Solutions from $130.00 to $135.00 and gave the company a “buy” rating in a research note on Wednesday, August 5th. Finally, Cantor Fitzgerald reduced their target price on Kratos Defense & Security Solutions from $115.00 to $100.00 and set an “overweight” rating on the stock in a report on Tuesday, August 4th. Three equities research analysts have rated the stock with a Strong Buy rating, twenty have issued a Buy rating, one has issued a Hold rating and two have assigned a Sell rating to the company. According to MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average target price of $86.40.

Insider Activity at Kratos Defense & Security Solutions

In other news, CFO Deanna H. Lund sold 7,000 shares of the stock in a transaction that occurred on Monday, September 21st. The stock was sold at an average price of $48.78, for a total transaction of $341,460.00. Following the sale, the chief financial officer directly owned 273,511 shares in the company, valued at approximately $13,341,866.58. This represents a 2.50% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Scot Jarvis sold 10,000 shares of the stock in a transaction on Tuesday, August 18th. The stock was sold at an average price of $63.50, for a total value of $635,000.00. Following the completion of the sale, the director directly owned 65,123 shares in the company, valued at $4,135,310.50. This represents a 13.31% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. In the last three months, insiders sold 382,013 shares of company stock valued at $23,806,932. 1.50% of the stock is owned by insiders.

Key Headlines Impacting Kratos Defense & Security Solutions

Here are the key news stories impacting Kratos Defense & Security Solutions this week:

• Positive Sentiment: Kratos received a $33.6 million NASA-related contract from Sierra Lobo to design and build the power-conversion system for the Space Reactor-1 Freedom spacecraft, strengthening its space and national-security portfolio ahead of its next earnings report. NASA contract announcement
• Positive Sentiment: Recent analysis points to robust organic growth, strong bookings and production ramp-ups in unmanned systems, propulsion and defense electronics. Kratos’ latest reported revenue rose 30.5% year over year to $458.8 million, while its 1.3x trailing book-to-bill ratio supports future revenue visibility. Seeking Alpha growth analysis
• Positive Sentiment: Analysts continue to highlight potential upside from rising global military spending. B. Riley retained a Buy rating, and the consensus remains “Moderate Buy.” Kratos also has a strong balance sheet, including very low leverage, although its profitability remains modest.
• Neutral Sentiment: Investors are comparing Kratos with larger contractor Lockheed Martin. KTOS offers faster growth exposure but trades at a substantially richer valuation and has less established earnings and cash-flow scale, making the stock more sensitive to execution and interest-rate concerns. Kratos versus Lockheed Martin analysis
• Negative Sentiment: B. Riley lowered its KTOS price target from $128 to $91, while Royal Bank of Canada issued a more pessimistic forecast and previously reduced its target to $55 from $80. Although Buy or Outperform ratings remain, the cuts signal increasing caution about valuation and near-term execution.
• Negative Sentiment: Kratos trades at an elevated earnings multiple despite a net margin of only 2.03% and ongoing investment needs, including negative free cash flow highlighted in recent analysis. This leaves the stock vulnerable to profit-taking after its prior rally.
• Negative Sentiment: CFO Deanna Lund sold 7,000 shares for approximately $280,000 under a pre-arranged Rule 10b5-1 plan. The scheduled nature limits the signal, but insider selling may still weigh modestly on sentiment.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Hedge funds and other institutional investors have recently modified their holdings of the stock. Versant Capital Management Inc increased its position in shares of Kratos Defense & Security Solutions by 61.9% in the second quarter. Versant Capital Management Inc now owns 696 shares of the aerospace company’s stock worth $35,000 after acquiring an additional 266 shares in the last quarter. Vision Retirement LLC grew its stake in Kratos Defense & Security Solutions by 288.2% in the first quarter. Vision Retirement LLC now owns 427 shares of the aerospace company’s stock valued at $30,000 after purchasing an additional 317 shares in the last quarter. Ranch Capital Advisors Inc. increased its holdings in Kratos Defense & Security Solutions by 5.1% in the first quarter. Ranch Capital Advisors Inc. now owns 6,553 shares of the aerospace company’s stock worth $462,000 after buying an additional 318 shares during the last quarter. Provenance Wealth Advisors LLC increased its position in Kratos Defense & Security Solutions by 128.9% during the third quarter. Provenance Wealth Advisors LLC now owns 744 shares of the aerospace company’s stock worth $32,000 after buying an additional 419 shares during the last quarter. Finally, IMG Wealth Management Inc. raised its stake in shares of Kratos Defense & Security Solutions by 427.0% in the 1st quarter. IMG Wealth Management Inc. now owns 527 shares of the aerospace company’s stock valued at $37,000 after acquiring an additional 427 shares in the last quarter. Institutional investors and hedge funds own 75.92% of the company’s stock.

Kratos Defense & Security Solutions Price Performance

The firm has a market capitalization of $7.71 billion, a price-to-earnings ratio of 241.71 and a beta of 1.11. The stock’s 50 day moving average price is $45.46 and its two-hundred day moving average price is $65.15. The company has a debt-to-equity ratio of 0.04, a current ratio of 5.54 and a quick ratio of 4.99.

Kratos Defense & Security Solutions (NASDAQ:KTOS) last released its earnings results on Tuesday, August 4th. The aerospace company reported $0.21 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.14 by $0.07. Kratos Defense & Security Solutions had a return on equity of 3.07% and a net margin of 2.03%. The firm had revenue of $458.80 million for the quarter, compared to analyst estimates of $410.36 million. During the same quarter last year, the firm posted $0.11 EPS. The company’s revenue was up 30.5% on a year-over-year basis. On average, equities research analysts anticipate that Kratos Defense & Security Solutions, Inc. will post 0.59 EPS for the current year.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc is a technology and defense contractor that develops systems and products for national security applications. The company supports the U.S. Department of Defense, intelligence agencies, national security-related organizations and selected commercial customers, with an emphasis on affordable, rapidly deployable technologies.

Its offerings include unmanned aerial and target systems, hypersonic and high-speed systems, rocket and propulsion technologies, satellite communications equipment, microwave electronics, radar and missile-defense systems, electronic warfare solutions, command-and-control systems, and virtual and live training products.