Every day, Wall Street analysts upgrade some stocks, downgrade others, and “initiate coverage” on a few more. But do these analysts even know what they’re talking about? Today, we’re taking one high-profile Wall Street pick and putting it under the microscope…
Kratos Defense & Security (NASDAQ:KTOS) stock has fallen off a cliff — not just once, but twice in two months.
The first drop came in August, after Kratos reported a sizable earnings beat, but a guidance miss, warning that sales booked ahead of schedule in Q2 would subtract from Q3 expectations and leave the company woefully short of Wall Street estimates in the current quarter. Kratos shares plummeted as much as 28% in the two weeks following this news — but the pain wasn’t over yet.
By the middle of last month, Kratos stock had recovered about half its losses from the post-earnings crash. But the second shoe dropped on Sept. 20: The Department of Defense announced the winner of a massive $1.12 billion contract to supply “threat-representative subscale targets with simple and complex reentry vehicles” for the U.S. Missile Defense Agency…and the winner wasn’t Kratos. (Instead, it was Northrop Grumman.) That news sent Kratos stock sliding once again, ultimately ending up down 17% as of yesterday’s close.
But then, a miracle happened. more