Why Did Kratos Defense Stock Drop Today?

Kratos Defense & Security (NASDAQ: KTOS) banal fell 5.5% done 11 a.m. ET Tuesday connected what should astir apt person been considered bully news.

Sky Perfect JSAT Corporation picked Kratos to make the crushed strategy for its caller 5G Non-Terrestrial Network (NTN) implicit the Asia-Pacific region.

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Sky Perfect describes its NSN arsenic fundamentally a outer communications system, though it volition besides usage long-endurance high-altitude platforms (HAP, specified arsenic drones and blimps) to supplement connectivity. Kratos's relation successful this task volition beryllium to supply the bundle for crushed systems that let nodes connected Earth to pass with the satellites and HAPS.

It's important to note, though, that astatine this constituent the task is conscionable focused connected proving "initial validation and interoperability," arsenic Sky Perfect's General Manager, Mr. Yuma Minowa, points out. We're truly successful the probe and improvement signifier of NSN, and it's not yet adjacent to commercialized viability.

Valuing the gross watercourse that Sky Perfect's NSN mightiness nutrient is truthful an workout successful guesswork astatine this time. It makes consciousness that the project's fiscal details aren't yet being made public. Still, it's worthy highlighting: Kratos's property merchandise had nary details connected however overmuch it mightiness beryllium paid for its enactment connected NSN.

That makes it hard to accidental however important the quality is for Kratos. What does look wide is that, astatine this point, the NSN doesn't look similar a large capable woody to determination the needle for Kratos -- oregon to marque the stock's 650-times net price-to-earnings ratio look immoderate little expensive.

So wherefore is Kratos banal down connected perchance bully quality today? Simple overvaluation is my guess.

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