Kratos Defense & Security Solutions (NASDAQ:KTOS) Shares Gap Down – Here’s What Happened

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) shares gapped down prior to trading on Tuesday . The stock had previously closed at $94.31, but opened at $88.75. Kratos Defense & Security Solutions shares last traded at $89.13, with a volume of 1,491,788 shares traded.

Kratos Defense & Security Solutions News Roundup

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

• Positive Sentiment: Q4 beat — Kratos reported adjusted Q4 EPS of $0.18 and revenue of $345.1M (≈+21.9% YoY), both ahead of Street expectations, showing material revenue and margin improvement. Zacks Article
• Positive Sentiment: Contract wins & product ramps — Kratos highlighted program wins (including a $12.4M USAF award with GE for the GEK1500 engine) and said it’s ramping Valkyrie drone output and hypersonic work — which supports longer-term revenue growth. GlobeNewswire
• Positive Sentiment: Growth runway — Management sees hypersonic revenue ramping (guidance commentary suggested hypersonic revenue could double toward ~$400M in 2026) and backlog growth, supporting multi-year upside if execution continues. MSN
• Neutral Sentiment: Analyst reaction mixed but generally constructive — Some firms raised targets (BTIG raised its price target to $115 and kept a buy), while others remain cautious on valuation. That creates differing near-term sentiment. The Fly
• Negative Sentiment: Weak near-term guidance — Management gave Q1 revenue guidance slightly below consensus, and commentary flagged potential impacts (e.g., federal funding timing), which is the main reason the market punished the stock despite the beat. Barron’s
• Negative Sentiment: Cash flow & insider sales concerns — Q4 showed weaker operating cash flow and higher inventory/capex as Kratos ramps production; multiple reports note heavy insider selling activity, both of which can worry short‑term investors. QuiverQuant
• Negative Sentiment: High valuation risk — The stock already trades at a lofty forward multiple, so any near-term disappointment or slower-than-expected cash conversion tends to produce outsized share moves. Schaeffers Research

Analyst Upgrades and Downgrades

A number of brokerages have weighed in on KTOS. UBS Group initiated coverage on Kratos Defense & Security Solutions in a research report on Wednesday, February 18th. They issued a “neutral” rating and a $79.00 price target on the stock. Citigroup reaffirmed a “market outperform” rating on shares of Kratos Defense & Security Solutions in a report on Tuesday. BNP Paribas Exane set a $80.00 target price on shares of Kratos Defense & Security Solutions in a research report on Tuesday, November 18th. BTIG Research boosted their price target on shares of Kratos Defense & Security Solutions from $95.00 to $115.00 and gave the company a “buy” rating in a research report on Tuesday. Finally, Cantor Fitzgerald reaffirmed an “overweight” rating on shares of Kratos Defense & Security Solutions in a research note on Tuesday. One analyst has rated the stock with a Strong Buy rating, fifteen have issued a Buy rating and six have issued a Hold rating to the company. According to data from MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus price target of $95.22.

Kratos Defense & Security Solutions Stock Down 4.0%

The company has a debt-to-equity ratio of 0.04, a quick ratio of 3.68 and a current ratio of 4.30. The stock has a market cap of $15.42 billion, a price-to-earnings ratio of 695.60 and a beta of 1.09. The firm’s 50-day simple moving average is $96.78 and its two-hundred day simple moving average is $84.65.

Kratos Defense & Security Solutions (NASDAQ:KTOS) last announced its earnings results on Monday, February 23rd. The aerospace company reported $0.18 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.14 by $0.04. The company had revenue of $345.10 million for the quarter, compared to analyst estimates of $327.51 million. Kratos Defense & Security Solutions had a net margin of 1.56% and a return on equity of 3.14%. Kratos Defense & Security Solutions’s quarterly revenue was up 21.9% on a year-over-year basis. During the same period in the prior year, the business earned $0.13 earnings per share. On average, sell-side analysts expect that Kratos Defense & Security Solutions, Inc. will post 0.31 EPS for the current fiscal year.

Insiders Place Their Bets

In other news, CFO Deanna H. Lund sold 30,000 shares of the firm’s stock in a transaction on Monday, December 1st. The stock was sold at an average price of $74.08, for a total value of $2,222,400.00. Following the transaction, the chief financial officer directly owned 273,285 shares in the company, valued at $20,244,952.80. This trade represents a 9.89% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, Director Scott I. Anderson sold 15,401 shares of the company’s stock in a transaction dated Monday, December 15th. The shares were sold at an average price of $74.51, for a total value of $1,147,528.51. Following the completion of the sale, the director owned 66,334 shares of the company’s stock, valued at $4,942,546.34. This represents a 18.84% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold a total of 881,907 shares of company stock valued at $72,664,183 over the last three months. 2.37% of the stock is owned by insiders.

Hedge Funds Weigh In On Kratos Defense & Security Solutions

Several institutional investors have recently modified their holdings of the stock. Mcguire Capital Advisors Inc. acquired a new stake in shares of Kratos Defense & Security Solutions in the 4th quarter valued at approximately $25,000. Atlantic Union Bankshares Corp raised its holdings in Kratos Defense & Security Solutions by 7,600.0% in the fourth quarter. Atlantic Union Bankshares Corp now owns 385 shares of the aerospace company’s stock worth $29,000 after purchasing an additional 380 shares during the period. TD Waterhouse Canada Inc. bought a new position in shares of Kratos Defense & Security Solutions during the second quarter worth $30,000. Rakuten Securities Inc. acquired a new position in shares of Kratos Defense & Security Solutions in the 2nd quarter valued at $31,000. Finally, Bayforest Capital Ltd bought a new stake in shares of Kratos Defense & Security Solutions in the 3rd quarter valued at $32,000. 75.92% of the stock is currently owned by institutional investors and hedge funds.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) is a technology-driven company that specializes in national security and defense solutions for government and military customers. The firm’s core capabilities span unmanned systems, satellite communications, missile defense, cyber security, and directed-energy weapons. Through its integrated approach, Kratos delivers mission-critical products and services designed to enhance operational readiness and support force modernization initiatives.

In the unmanned systems arena, Kratos develops high-performance aerial platforms used as target drones, low-cost attritable aircraft and experimental stealth demonstrators.