Kratos Defense & Security Solutions (NASDAQ:KTOS) Stock Price Down 12.3% – What’s Next?

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) shares were down 12.3% during mid-day trading on Wednesday. The company traded as low as $35.71 and last traded at $35.96. 8,207,375 shares traded hands during trading, an increase of 88% from the average session volume of 4,357,783 shares. The stock had previously closed at $40.99.

Key Stories Impacting 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

KTOS has been the subject of a number of recent research reports. Zacks Research upgraded shares of Kratos Defense & Security Solutions from a “hold” rating to a “strong-buy” rating in a research note on Friday, October 23rd. Piper Sandler cut their target price on shares of Kratos Defense & Security Solutions from $75.00 to $61.00 and set an “overweight” rating on the stock in a research report on Friday, October 23rd. KeyCorp decreased their price objective on Kratos Defense & Security Solutions from $130.00 to $75.00 and set an “overweight” rating on the stock in a report on Monday. Royal Bank Of Canada lowered their price objective on Kratos Defense & Security Solutions from $80.00 to $55.00 and set an “outperform” rating for the company in a research note on Wednesday, October 28th. Finally, Citigroup reiterated a “market outperform” rating on shares of Kratos Defense & Security Solutions in a report on Monday, October 19th. Three analysts have rated the stock with a Strong Buy rating, twenty have given a Buy rating, one has assigned a Hold rating and two have assigned a Sell rating to the company. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $81.70.

Kratos Defense & Security Solutions Stock Up 5.1%

The company has a debt-to-equity ratio of 0.04, a quick ratio of 4.99 and a current ratio of 5.54. The firm has a market capitalization of $6.59 billion, a PE ratio of 206.47 and a beta of 1.18. The company has a fifty day simple moving average of $43.48 and a two-hundred day simple moving average of $62.56.

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

Insiders Place Their Bets

In related news, CFO Deanna Lund sold 7,000 shares of the company’s stock in a transaction on Monday, September 21st. The stock was sold at an average price of $48.78, for a total value of $341,460.00. Following the transaction, the chief financial officer directly owned 273,511 shares of the company’s stock, valued at $13,341,866.58. This represents a 2.50% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Scot B. Jarvis sold 10,000 shares of the firm’s 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 transaction, the director owned 65,123 shares of the company’s stock, valued at $4,135,310.50. This trade represents a 13.31% decrease in their position. The disclosure for this sale is available in the SEC filing. In the last quarter, insiders have sold 373,013 shares of company stock valued at $23,340,582. Corporate insiders own 1.50% of the company’s stock.

Institutional Trading of Kratos Defense & Security Solutions

Large investors have recently added to or reduced their stakes in the company. Russell Investments Group Ltd. lifted its holdings in Kratos Defense & Security Solutions by 2.6% in the 3rd quarter. Russell Investments Group Ltd. now owns 62,405 shares of the aerospace company’s stock valued at $2,664,000 after purchasing an additional 1,553 shares in the last quarter. CENTRAL TRUST Co grew its stake in shares of Kratos Defense & Security Solutions by 10.0% in the third quarter. CENTRAL TRUST Co now owns 7,126 shares of the aerospace company’s stock worth $304,000 after acquiring an additional 649 shares in the last quarter. Fifth Third Bancorp raised its holdings in 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 valued at $2,675,000 after acquiring an additional 22,792 shares in the last quarter. Jacobi Capital Management LLC purchased a new position in Kratos Defense & Security Solutions in the third quarter valued at approximately $52,000. Finally, Gables Capital Management Inc. grew its holdings in shares of Kratos Defense & Security Solutions by 6.6% during the third quarter. Gables Capital Management Inc. now owns 35,435 shares of the aerospace company’s stock worth $1,513,000 after purchasing an additional 2,185 shares during the last quarter. Hedge funds and other institutional investors own 75.92% of the company’s stock.

Kratos Defense & Security Solutions Company Profile

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.