Kratos Stock Stumbles Into Q4 Earnings After Red-Hot Run: Can Contracts Offset Margin Fears?

Kratos stock has been in the spotlight for its selection to participate in phase 1 of the Drone Dominance Program, and investors are looking forward to updates on the same during earnings.

• On average, Wall Street analysts have a ‘Strong Buy’ rating, according to Koyin, with 15 out of 20 analysts rating the stock ‘Buy’ or higher.
• Wall Street analysts are expecting Kratos to post fourth-quarter revenue of $327.46 million, a nearly 16% increase from a year earlier, according to data from Fiscal AI.
• Last week, Kratos said it has been awarded a contract through the Department of War’s Joint Hypersonics Transition Office to support test and evaluation of thermal protection systems for hypersonic vehicles.

Shares of Kratos Defense & Security Solutions fell nearly 2% in overnight trading, heading into earnings and continuing their decline from Friday when the stock dipped over 9% and snapped a four-day winning streak.

Kratos stock has gained nearly 27% so far this year, driven by several defense contracts and its selection to participate in the initial Phase 1 Gauntlet for the Office of the Secretary of War’s Drone Dominance Program.

On average, Wall Street analysts have a ‘Strong Buy’ rating, according to Koyin, with 15 out of 20 analysts rating the stock ‘Buy’ or higher and five ‘Hold.’ The average analyst price target was $115.70, implying more than 20% upside from the last closing price of $96.08.

Earnings Ahead For KTOS

Wall Street analysts are expecting Kratos to post fourth-quarter revenue of $327.46 million, a nearly 16% increase from a year earlier and earnings per share of $0.15, compared with $0.13 a year ago, according to data compiled by Fiscal AI. The company is expected to post quarterly results on Monday after the markets close.

The week leading up to earnings was filled with several positive catalysts for Kratos, with the company last week noting that it has been awarded a contract through the Department of War’s Joint Hypersonics Transition Office to support test and evaluation of thermal protection systems for hypersonic vehicles.

The company was also awarded a contract by Airbus Defence and Space to deliver a ground segment for its customer Space Communication Technologies (SCT) SPC to support the OmanSat-1 software-defined satellite.

What Are KTOS Retail Users Thinking?

Retail sentiment on Kratos jumped to ‘extremely bullish’ from ‘extremely bearish’ territory a week ago, with message volumes at ‘high’ levels, according to data from Stocktwits.

A user on Stocktwits noted that the dip on Friday might have been a “curious” dump, given the company’s low margins.

A bullish user, on the other hand, noted that drone stocks were declining, reportedly ahead of the U.S.-Iran meeting for another round of talks this week.

Shares of Kratos have gained 270% in the last 12 months.

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