A lower-than-expected Q1 forecast could be weighing on Kratos
Kratos Defense & Security Solutions Inc (NASDAQ:KTOS) stock is down 8.7% to trade at $86.06 this morning, the defense contractor brushing off an adjusted fourth-quarter earnings of 18 cents per share on $345.10 million in revenue, both of which topped analyst estimates.
Its first-quarter revenue forecast that fell short of expectations is what’s weighing, with the recent government shutdown a culprit. Despite the movement today, BTIG and J.P. Morgan Securities hiked their price targets to $115 and $99, respectively.
KTOS hit a nearly 22-year high of $134 on Jan. 20, but has taken a 33.8% haircut off that peak. The shares’ 126-day moving average is stepping up today, a trendline that’s only been breached a handful of times on a closing basis in the last 12 months. Kratos stock remains up 261% year-over-year.
Options traders are unfazed. At last check, over 4,905 calls have changed hands, volume that’s double the average daily amount and nearly twice the number of puts traded. The March 145 call is seeing notable sell-to-open activity, while the weekly 2/27 94-strike call is also getting attention.
It’s also worth noting that the stock tends to outperform options traders’ volatility expectations, per its Schaeffer’s Volatility Scorecard (SVS) of 88 out of 100.