Space stock Karman Holdings on Monday is giving back a portion of Friday's explosive gain.
The IBD 50 Growth Stocks To Watch pick is a recent new issue and already a mutual fund favorite. Karman stock reached a record high on Monday before retracing lower.
The IBD 50 and IPO Leaders name jumped 17.1% in heavy volume Friday after Raymond James initiated coverage on the stock with a strong buy and a 100 price target.
The 100 price target was an 87% premium over Thursday's closing price of 53.38. Shares during Monday's session pulled back around 3% and were trading near the 60.60 level.
Karman designs and engineers hardware for extreme conditions used in missile defense, spacecraft, launch vehicles and satellites.
The company makes launch, separation and emergency exiting systems. Its components support mission-critical functions from electrical signaling to safe separation. It supplies parts for missiles used by the U.S. military, including the Air Force, Navy and Missile Defense Agency.
It is also designing and producing a lunar lander that will deliver NASA-sponsored research equipment to the moon.
Karman stock ranks No. 1 out of 73 stocks in the Aerospace/Defense group, which holds the 28th spot out of the 197 industry groups that Investor's Business Daily tracks. That far exceeds IBD 50 name Rocket Lab, with its 28th placing.
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Space Stock Hits A New High Before Fading
Karman stock started trading on Feb. 13, with an initial offering price of $22 per share. It has been climbing since its April low of 25.03.
The space stock exploded higher Friday and broke out of a newly formed consolidation pattern with a 57.31 buy point. The stock rebounded after nearly touching its 10-week moving average support level.
The defense stock pulled back to just above the top of the buy zone, which reaches to 60.18, according to MarketSurge pattern recognition.
Its relative strength line reached a new high on Friday, and it holds a 96 Relative Strength Rating.
Its IBD Accumulation/Distribution Rating of A- indicates fairly heavy institutional buying over the last 13 weeks. Mutual funds have piled into the stock, with 241 funds owning shares in June, up from 56 in March.
Five IBD Mutual Fund Index names initiated positions in the June quarter, including Invesco Discovery Fund. And Karman's 1.7 up/down volume ratio shows positive demand over the last 50 days.
Karman Reports Record Revenue
On Aug. 7, Karman reported better-than-expected second-quarter sales and in-line earnings. It produced record-high quarterly revenue of $115.1 million, or 35% growth. Its earnings increased to 10 cents per share from 3 cents a year ago.
As of June 30, it said it had a $719.3 million funded backlog of invoiceable purchase orders, long-term agreements, and contracts to proceed.
It also raised its full-year 2025 revenue guidance to a range of $452 million to $458 million from its prior forecast of $423 million to $433 million. It also guided higher on its 2025 EBITDA, a measure of profitability.
"Robust defense funding to restock critical capabilities and build the Golden Dome for America, combined with a continued increase in U.S. space launch cadence, represent powerful tail winds for our business beyond 2025," Karman Chief Executive Tony Koblinski said in the earnings release.
Analysts see full-year 2025 earnings per share rising to 36 cents, up from 11 cents in 2024. Full-year 2026 earnings projections call for 55 cents per share, or 53% growth.
Also, the stock holds a perfect 99 IBD Composite Rating.
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