Key Takeaways
- Cathie Wood’s ARK Invest added 34% to its Kratos Defense & Security Solutions (KTOS) stake in Q2, while Jericho Capital Asset Management, a $12 billion fund, sold all 2.65 million of its shares.
- Kratos is down 43% since March 31, the last date Jericho’s filings show it holding the stock, so the sale has looked smart so far.
- Analysts expect Kratos’s normalized EPS to rise from $0.55 in 2025 to $1.46 in 2028, and the stock trades at 42x forward earnings, below its 5-year average of 58x.
- At today’s price, Wood has the better case. The risks to watch when Kratos reports this week are negative free cash flow and more share sales.
Two big funds looked at Kratos Defense & Security Solutions in Q2 and did opposite things.
Cathie Wood’s ARK Invest bought more. Jericho Capital Asset Management, a $12 billion fund, sold every share it had.
Both moves come from the funds’ 13Fs for the quarter ended June 30, filed Aug. 14. Those are their latest filings.
And with Kratos expected to report Q3 results this week, one of them is about to look a lot smarter.
Wood added as Jericho walked away
ARK held 4.67 million Kratos shares on June 30, worth $233 million at the quarter-end price. That was 34% more shares than it held at the end of March. The stake was 1.5% of its 13F holdings and its 23rd-largest position. (The firm manages $15.98 billion in all.)
Jericho went the other way. On March 31, it held 2.65 million shares worth $187 million, 2.8% of its 13F holdings. By June 30, it held none.
A 13F only shows what a fund owned on the last day of a quarter. So there’s no telling when in those three months either fund traded, or at what price.
TIKR tracks 25 analysts on Kratos Defense & Security Solutions. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Kratos Defense & Security Solutions, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Kratos Defense & Security Solutions’ Analyst Ratings
So far, Jericho looks like it made the right bet
Kratos closed Tuesday at $40.99. That’s 19% below where it ended June, and 43% below where it ended March, the last date Jericho’s filings show it holding the stock. (Those are price changes only, since neither filing says what the funds paid.)
The business hasn’t been the problem. Kratos has raised its 2026 revenue guidance twice this year, most recently to $1.75-$1.81 billion.
But that growth costs money. In May, Kratos guided to negative free cash flow of $85 million to $105 million for 2026.
It has also sold new stock to pay for new drone and hypersonic facilities, which diluted existing shareholders.
The estimates kept climbing
Analysts expect Kratos’s normalized EPS to more than double in three years, from $0.55 in 2025 to $0.82 this year and $1.46 by 2028:
What changed is how much investors will pay for those earnings.
Kratos traded at 183x forward earnings at its Jan. 16 peak. Today it’s at 43x. That’s below its 5-year average of 58x, but still about twice its low of 22x from October 2022:
Analysts have cut their targets too, but by far less than the stock has fallen.
Their consensus target peaked at $119 in March and has since slid to $90, its lowest point of the past year:
That’s still 120% above Tuesday’s close. And of the 25 analysts who cover Kratos, the most cautious has a $50 target, which is also above the price.
I’d side with Wood from here
Jericho has been right so far.
But Wood owns a business whose earnings analysts expect to more than double by 2028. She has it at a multiple below its 5-year average and a price below every analyst’s target.
That’s a far cheaper Kratos than the one Jericho held on March 31.
The cash is the risk. Kratos expects to burn cash this year, and it has already sold stock to fund its expansion. Another sale would dilute shareholders again.
Frankly, at today’s price, I’d rather be holding Kratos with Wood than watching from the sidelines with Jericho.
Of course, this week’s report could change that. If Kratos trims its guidance or burns more cash than planned, Jericho’s exit will keep looking smart.
And the funds’ 13Fs for the quarter ended Sept. 30, due by Nov. 16, will show whether Wood kept buying as the stock fell.
So what is Kratos stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Kratos could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
