Since pitching Kratos (NASDAQ:KTOS) equity as a short last year that made close to 50% at one point, the stock has largely recovered despite deteriorating financial performance. As a reminder, Kratos is a specialized security technology business providing products, solutions and services for domestic and international customers, with a focus on the US Government.
We believe that the run-up in the stock has been driven by two primary, but very misleading factors:
- Eric DeMarco (CEO) has provided long-term guidance to the Street that Kratos will eventually reach $80M of EBITDA and $800M of revenue. By slapping a 10x multiple on an ambiguously gotten forward number of $80M, the sell-side is able to justify the current trading price of the s…
Read the full article at: http://seekingalpha.com/article/4017032-kratos-impending-insolvency-will-wipe-equity