Kratos Defense & Security Solutions (NASDAQ:KTOS) Stock Falls 7.1% – What’s Next?

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) traded down 7.1% on Thursday. The company traded as low as $32.50 and last traded at $33.39. 9,376,761 shares changed hands during trading, an increase of 114% from the average daily volume of 4,381,778 shares. The stock had previously closed at $35.96.

Trending Headlines about Kratos Defense & Security Solutions

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

• Positive Sentiment: Third-quarter adjusted EPS was $0.24, above the $0.21 consensus, while revenue rose 35.7% year over year to $471.8 million. Government Solutions growth was a key contributor. Kratos Defense Q3 Earnings Outpace Estimates, Revenues Increase Y/Y
• Positive Sentiment: Orders exceeded sales, with a 2.2-to-1 book-to-bill ratio and backlog reported at $2.65 billion—supportive of future revenue. Fourth-quarter revenue guidance has a $495 million midpoint, slightly above analyst expectations, and the company maintained a roughly $1.8 billion full-year revenue outlook. Kratos Sales Up 36%, Free Cash Flow Negative: Rapid Earnings Reaction
• Neutral Sentiment: Call-option trading activity was unusually high, up 44% versus its average volume. This may reflect increased investor interest but does not establish the direction of future performance.
• Negative Sentiment: Despite adjusted earnings growth, Kratos reported a small GAAP net loss, negative free cash flow, and a GAAP operating loss. These issues raise questions about near-term profitability and cash conversion. Kratos Q3 2026 Earnings Call Transcript
• Negative Sentiment: BTIG cut its price target to $65 from $104, although it retained a Buy rating. The reduction signals a more cautious valuation view even as the firm sees upside potential. BTIG Research ratings

Analysts Set New Price Targets

Several brokerages have recently commented on KTOS. BTIG Research reduced their price objective on Kratos Defense & Security Solutions from $104.00 to $65.00 and set a “buy” rating on the stock in a research report on Friday. Truist Financial cut their target price on Kratos Defense & Security Solutions from $135.00 to $104.00 and set a “buy” rating for the company in a research note on Thursday, August 13th. Weiss Ratings reiterated a “sell (d+)” rating on shares of Kratos Defense & Security Solutions in a research report on Tuesday. Rothschild & Co Redburn assumed coverage on shares of Kratos Defense & Security Solutions in a research note on Tuesday, October 6th. They set a “buy” rating and a $70.00 price target on the stock. Finally, B. Riley Financial lowered their price objective on shares of Kratos Defense & Security Solutions from $128.00 to $91.00 and set a “buy” rating for the company in a report on Friday, October 30th. Three 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 issued a Sell rating to the company’s stock. Based on data from MarketBeat, the company has a consensus rating of “Moderate Buy” and a consensus target price of $81.70.

Kratos Defense & Security Solutions Stock Up 5.1%

The company has a current ratio of 5.54, a quick ratio of 4.99 and a debt-to-equity ratio of 0.04. The stock has a 50 day simple moving average of $43.48 and a 200 day simple moving average of $62.56. The firm has a market capitalization of $6.59 billion, a PE ratio of 292.50 and a beta of 1.18.

Kratos Defense & Security Solutions (NASDAQ:KTOS) last issued its earnings results on Thursday, November 5th. The aerospace company reported $0.24 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.21 by $0.03. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.07%. The firm had revenue of $471.80 million for the quarter, compared to analysts’ expectations of $471.40 million. During the same quarter last year, the business earned $0.14 earnings per share. The business’s revenue was up 35.7% on a year-over-year basis. As a group, sell-side analysts forecast that Kratos Defense & Security Solutions, Inc. will post 0.59 earnings per share for the current year.

Insider Activity at Kratos Defense & Security Solutions

In related news, Director Scot Jarvis sold 10,000 shares of the firm’s stock in a transaction dated Tuesday, August 18th. The stock was sold at an average price of $63.50, for a total value of $635,000.00. Following the sale, the director directly owned 65,123 shares of the company’s stock, valued at $4,135,310.50. This trade represents a 13.31% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, insider Phillip D. Carrai sold 6,500 shares of the business’s stock in a transaction dated Thursday, October 15th. The shares were sold at an average price of $39.86, for a total value of $259,090.00. Following the transaction, the insider owned 169,196 shares in the company, valued at approximately $6,744,152.56. This represents a 3.70% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 373,013 shares of company stock valued at $23,340,582 in the last quarter. 1.50% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Kratos Defense & Security Solutions

Institutional investors have recently modified their holdings of the business. Channel Wealth LLC purchased a new position in shares of Kratos Defense & Security Solutions in the 3rd quarter worth $307,000. Diversified Trust Co boosted its stake in shares of Kratos Defense & Security Solutions by 156.2% in the third quarter. Diversified Trust Co now owns 13,972 shares of the aerospace company’s stock worth $596,000 after acquiring an additional 8,518 shares during the period. Russell Investments Group Ltd. grew its holdings in Kratos Defense & Security Solutions by 2.6% during the 3rd quarter. Russell Investments Group Ltd. now owns 62,405 shares of the aerospace company’s stock valued at $2,664,000 after buying an additional 1,553 shares in the last quarter. CENTRAL TRUST Co increased its holdings in Kratos Defense & Security Solutions by 10.0% in the 3rd quarter. CENTRAL TRUST Co now owns 7,126 shares of the aerospace company’s stock valued at $304,000 after acquiring an additional 649 shares during the last quarter. Finally, Fifth Third Bancorp lifted its position in shares of Kratos Defense & Security Solutions by 57.2% in the third quarter. Fifth Third Bancorp now owns 62,654 shares of the aerospace company’s stock worth $2,675,000 after buying an additional 22,792 shares in the last quarter. 75.92% of the stock is owned by hedge funds and other institutional investors.

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.