Kratos Defense & Security Solutions (NASDAQ:KTOS) Stock Falls 7.1% - Should You Sell?

Key Points

• Kratos shares fell 7.1% to $33.39 on Thursday, with trading volume more than double its daily average amid a broader selloff and valuation concerns.
• The company beat quarterly estimates, reporting EPS of $0.24 versus $0.21 expected and revenue of $471.8 million versus $471.4 million. Its 2026 revenue outlook of $1.8 billion matches consensus.
• Potential supports include a $33.6 million NASA-related subcontract and an analyst consensus rating of “Moderate Buy,” but defense-spending uncertainty and the stock’s high earnings multiple remain risks.

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

Kratos Defense & Security Solutions News Summary

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

• Positive Sentiment: Quarterly earnings were $0.24 per share, above the $0.21 consensus estimate, and revenue of $471.8 million slightly topped expectations. The beat was positive, though relatively modest. Earnings press release
• Positive Sentiment: Kratos has a $33.6 million subcontract connected to NASA’s Space Reactor-1 Freedom project, supporting its presence in advanced space systems. NASA contract analysis
• Neutral Sentiment: Management’s 2026 revenue guidance of $1.8 billion matches consensus. Fourth-quarter revenue guidance of $480 million–$510 million has a $495 million midpoint, slightly above the $493.5 million estimate, although the lower end is below consensus.
• Negative Sentiment: Shares have faced pressure amid a broader selloff and concerns about valuation after a steep pullback. With the stock carrying a high earnings multiple, investors may demand stronger forward growth to support the valuation. Report on broad selloff
• Negative Sentiment: Reports of a possible shift in congressional leadership and scrutiny of Pentagon spending priorities add uncertainty around defense procurement and funding for advanced systems. Congress and defense spending risks

Analyst Upgrades and Downgrades

Several research analysts have issued reports on KTOS shares. Oppenheimer started coverage on Kratos Defense & Security Solutions in a research note on Thursday, October 22nd. They set an "outperform" rating and a $50.00 price objective for the company. The Goldman Sachs Group reduced their target price on shares of Kratos Defense & Security Solutions from $88.00 to $77.00 and set a "buy" rating on the stock in a research note on Monday, October 12th. Cantor Fitzgerald lowered their target price on shares of 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. Citigroup reiterated a "market outperform" rating on shares of Kratos Defense & Security Solutions in a research report on Monday, October 19th. Finally, Rothschild & Co Redburn started coverage on shares of Kratos Defense & Security Solutions in a report on Tuesday, October 6th. They set a "buy" rating and a $70.00 price target for the company. Three research analysts have rated the stock with a Strong Buy rating, twenty have assigned a Buy rating, one has assigned a Hold rating and two have given a Sell rating to the stock. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and an average price target of $83.65.

Kratos Defense & Security Solutions Price Performance

The stock has a fifty day moving average of $44.24 and a 200-day moving average of $63.52. The firm has a market capitalization of $6.27 billion, a P/E ratio of 196.41 and a beta of 1.18. The company has a quick ratio of 4.99, a current ratio of 5.54 and a debt-to-equity ratio of 0.04.

Kratos Defense & Security Solutions (NASDAQ:KTOS - Get Free Report) last issued its quarterly earnings data on Thursday, November 5th. The aerospace company reported $0.24 EPS for the quarter, topping analysts' consensus estimates of $0.21 by $0.03. The firm had revenue of $471.80 million for the quarter, compared to analyst estimates of $471.40 million. Kratos Defense & Security Solutions had a net margin of 2.03% and a return on equity of 3.07%. Equities analysts predict that Kratos Defense & Security Solutions, Inc. will post 0.59 EPS for the current fiscal year.

Insider Buying and Selling at Kratos Defense & Security Solutions

In related news, Director Scot Jarvis sold 10,000 shares of the firm's stock in a transaction that occurred on Tuesday, August 18th. The shares were sold at an average price of $63.50, for a total value of $635,000.00. Following the completion of the sale, 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 ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available at the SEC website. Also, CFO Deanna H. Lund sold 7,000 shares of the firm's stock in a transaction that occurred on Monday, October 26th. The shares were sold at an average price of $40.00, for a total transaction of $280,000.00. Following the completion of the sale, the chief financial officer directly owned 266,740 shares of the company's stock, valued at approximately $10,669,600. This represents a 2.56% 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 373,013 shares of company stock valued at $23,340,582 over the last three months. Insiders own 1.50% of the company's stock.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Hedge funds have recently added to or reduced their stakes in the company. Vision Retirement LLC grew its position in shares of Kratos Defense & Security Solutions by 288.2% in the 1st quarter. Vision Retirement LLC now owns 427 shares of the aerospace company's stock valued at $30,000 after acquiring an additional 317 shares during the period. Harbor Investment Advisory LLC acquired a new position in shares of Kratos Defense & Security Solutions during the 2nd quarter worth about $25,000. IMG Wealth Management Inc. raised its holdings 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 purchasing an additional 427 shares during the period. Geneos Wealth Management Inc. raised its holdings in shares of Kratos Defense & Security Solutions by 333.3% in the 1st quarter. Geneos Wealth Management Inc. now owns 650 shares of the aerospace company's stock valued at $46,000 after purchasing an additional 500 shares during the period. Finally, Compass Financial Management LLC bought a new stake in shares of Kratos Defense & Security Solutions in the 2nd quarter valued at about $34,000. Institutional investors own 75.92% of the company's stock.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.