The company’s operating profit for July-September dropped 25% from a year earlier to 68 billion won ($49.9 million), well short of the 103 billion won consensus forecast compiled by Nomura. LIG also reported a net loss of 8.2 billion won. The results were released after Friday’s market close.

Nomura analyst Eon Hwang attributed the shortfall mainly to larger-than-expected losses at LIG’s robotics affiliate and higher research-and-development costs. Delayed component supplies also held back exports of the company’s medium-range surface-to-air missiles to the Middle East, he said.

Hwang said defense stocks in South Korea and globally have retreated since the U.S. midterm elections, with investors betting on a possible end to the Middle East conflict. Hanwha Aerospace, which makes self-propelled howitzers, was down 1.7%, while fighter-jet supplier Korea Aerospace Industries fell 1.5%.

Investor sentiment toward LIG has also been hurt by a South Korean investigation into an alleged bribery case involving a company employee. The probe has resulted in a temporary ban on LIG bidding for local defense projects, Hwang said.

Nomura lowered its target price for LIG shares to 600,000 won from 1,100,000 won but kept its buy rating. The brokerage said missile-defense demand remains solid and expects the company to win new contracts, particularly in the United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain.