Kratos Defense Shares Decline: Analysts Offer Mixed Insights

Shares of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) experienced a significant decline on Wednesday, opening at $82.37 after closing the previous day at $90.22. The stock continued to decrease, trading at $76.28 with a volume of over 2.1 million shares exchanged.

Analysts have been closely monitoring Kratos’ stock performance, with mixed reactions following its recent earnings report. On November 4, 2023, Kratos reported earnings per share (EPS) of $0.14, surpassing the consensus estimate of $0.12. The company achieved a revenue of $347.60 million for the quarter, exceeding expectations of $323.01 million. This marks a year-over-year revenue increase of 26.0%, with a net margin of 1.20% and a return on equity of 3.10%.

Analyst Ratings and Price Targets

Several equity analysts have provided insights into Kratos’ stock, offering varying target prices. On September 26, 2023, Robert W. Baird raised its target price from $70.00 to $87.00, maintaining an “outperform” rating. Benchmark increased its target from $48.00 to $50.00 with a “buy” rating on July 8, 2023. Citigroup reiterated its “outperform” rating on October 2, 2023, while Truist Financial raised its price target significantly from $78.00 to $125.00 on October 15, 2023. The Royal Bank of Canada also upped its target from $50.00 to $65.00 on August 8, 2023.

Currently, one research analyst has rated Kratos stock as a “Strong Buy,” while twelve have given it a “Buy” rating and four have issued a “Hold” rating. According to data from MarketBeat, the stock carries a consensus rating of “Moderate Buy” with an average target price of $77.36.

Insider Trading Activity

In addition to analyst activity, insider transactions have also been notable. Chief Financial Officer Deanna H. Lund sold 5,000 shares on August 19, 2023, at an average price of $65.10, resulting in a total transaction of $325,500. Following this sale, Lund holds 313,327 shares, valued at approximately $20.4 million, reflecting a 1.57% decrease in ownership.

Moreover, insider Phillip D. Carrai sold 6,000 shares on September 15, 2023, for a total of $412,920. After this transaction, Carrai owns 258,073 shares, worth around $17.8 million, marking a 2.27% decrease in his ownership stake. In total, insiders sold 81,716 shares valued at $6.4 million in the last quarter, with corporate insiders owning 2.37% of the company’s stock.

Institutional Investment Trends

Institutional investors have also been active in adjusting their holdings of Kratos shares. Cambridge Investment Research Advisors Inc. increased its stake by 143.5% in the first quarter, now owning 22,485 shares valued at $668,000. Amalgamated Bank significantly raised its stake by 757.2%, now holding 43,357 shares valued at $1.3 million.

Other notable movements include the New York State Teachers Retirement System, which acquired a new position valued at approximately $1.4 million, and the Teacher Retirement System of Texas, which invested about $656,000. Principal Financial Group Inc. made a substantial increase, raising its stake by 9,709.0%, now owning 997,578 shares worth $29.6 million. Overall, institutional investors control about 75.92% of Kratos’ stock.

As Kratos Defense & Security Solutions navigates this turbulent market, the reactions from analysts and institutional investors will be crucial in determining the company’s future performance.