Mercury Systems Inc (MRCY)
NASDAQ:MRCY
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Mercury Systems
(NASDAQ:MRCY)
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Rating:55Neutral
Price Target:
$92.00
▲(16.88% Upside)
Action:ReiteratedDate:02/05/26
The score is held back primarily by weak profitability and poor near-term technicals (price below key moving averages). These are partially offset by solid cash generation and a constructive earnings call featuring strong bookings/backlog and improving adjusted EBITDA, but negative earnings and negative P/E keep the overall profile mid-range.
Positive Factors
Strong bookings and backlog growth
A near-$1.5B backlog and book-to-bill >1 provide multi-quarter revenue visibility typical of defense programs. This durable backlog supports production planning, steadier revenue conversion over time, and deeper program content with primes—reducing short-term demand risk.
Negative Factors
GAAP losses and negative margins
Persisting GAAP losses and negative net margins constrain retained earnings and long-term return on equity. Until sustainable GAAP profitability is restored, the company may face limitations on capital allocation, shareholder returns, and vulnerability to cost shocks despite improving adjusted metrics.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong bookings and backlog growth
A near-$1.5B backlog and book-to-bill >1 provide multi-quarter revenue visibility typical of defense programs. This durable backlog supports production planning, steadier revenue conversion over time, and deeper program content with primes—reducing short-term demand risk.
Read all positive factors
Mercury Systems (MRCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.47B
Dividend YieldN/A
Average Volume (3M)548.85K
Price to Earnings (P/E)―
Beta (1Y)1.07
Revenue Growth8.63%
EPS Growth72.72%
CountryUS
Employees2,364
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.16
Shares Outstanding60,014,633
10 Day Avg. Volume694,586
30 Day Avg. Volume548,846
Financial Highlights & Ratios
PEG Ratio1.14
Price to Book (P/B)2.13
Price to Sales (P/S)3.44
P/FCF Ratio26.36
Enterprise Value/Market Cap1.13
Enterprise Value/Revenue5.37
Enterprise Value/Gross Profit19.07
Enterprise Value/Ebitda70.35
Forecast
1Y Price Target
$92.50Price Target Upside17.52% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.97
Revenue Forecast (FY)$953.25M
Mercury Systems Business Overview & Revenue Model
Company Description
Mercury Systems, Inc., a technology company, manufactures and sells components, products, modules, and subsystems for aerospace and defense industries in the United States, Europe, and the Asia Pacific. Its products and solutions are deployed in a...
How the Company Makes Money
Mercury Systems makes money primarily by selling defense electronics products and subsystems and by providing related services to aerospace and defense customers. Key revenue streams include: (1) Product sales of embedded and ruggedized computing ...
Mercury Systems Key Performance Indicators (KPIs)
Any
Net Revenue by Geography
Reveals how much sales come from the U.S. versus international markets, indicating exposure to geopolitical risk, export controls, and regional defense spending trends. Greater geographic diversification can reduce dependence on any single government or procurement cycle.
Reveals how much sales come from the U.S. versus international markets, indicating exposure to geopolitical risk, export controls, and regional defense spending trends. Greater geographic diversification can reduce dependence on any single government or procurement cycle.
Data provided by:
The Fly
The FlyMercury Systems Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational execution and tangible progress: robust bookings, record backlog, revenue growth, significant adjusted EBITDA improvement, positive free cash flow, cash and leverage reduction, and strategic design wins. Headwinds are transitional and largely related to mix (conversion of lower-margin backlog), near-term gross margin compression, Q3 seasonality/expected cash outflow due to pulled-forward receipts, and some one-time or near-term charges (restructuring, litigation). Management signaled confidence in margin expansion over time and potential demand tailwinds (Golden Dome, increased defense budgets) but remained appropriately cautious about assuming further quarter-to-quarter accelerations. On balance the positives (bookings, backlog growth, EBITDA gain, cash and working capital improvement, and execution wins) outweigh the manageable near-term challenges.Positive Updates
Strong Bookings and Backlog Growth
Bookings of $288M in Q2 with a book-to-bill of 1.23; record backlog approaching $1.5B, up $119M or 8.8% year-over-year.
Negative Updates
Gross Margin Compression
Gross margin decreased to 26% in Q2 (down ~130 basis points YoY) driven by conversion of a higher mix of lower-margin backlog in the quarter.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Bookings and Backlog Growth
Bookings of $288M in Q2 with a book-to-bill of 1.23; record backlog approaching $1.5B, up $119M or 8.8% year-over-year.
Read all positive updates
Company Guidance
Mercury reiterated its FY‑2026 guidance while highlighting substantial Q2 outperformance and a ~$30M revenue/cash pull‑forward into Q2: Q2 bookings were $288M (book‑to‑bill 1.23; aggregate YTD book‑to‑bill 1.17), revenue $233M (1H revenue +7.1% YoY; record first‑half and highest point‑in‑time revenue since FY2021), backlog ~ $1.5B (up $119M, +8.8% YoY), adjusted EBITDA $30M (adj. EBITDA margin 12.9%, up 36.3% YoY; 1H adj. EBITDA margin 14.3% and 400 bps YoY expansion), gross margin 26% (down ~130 bps YoY), adjusted EPS $0.16 (vs. $0.07 prior year), GAAP net loss ~$15M (loss per share ~$0.26), Q2 free cash flow +$46M (≈$41M positive FCF over the last two quarters), cash balance $335M, net working capital ≈$414M (down ~$61M YoY, ~‑12.9%), and net debt ~$257M; the company still expects full‑year revenue growth of low single digits, full‑year adjusted EBITDA margin approaching mid‑teens with Q3 adj. EBITDA margin approaching double‑digits and Q4 the strongest, a Q3 free cash outflow (after the Q2 pull‑forward) but positive free cash flow for the year, and longer‑term targets of low‑to‑mid‑20s adj. EBITDA margins and ~50% free cash flow conversion.Mercury Systems Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
62
Positive
Cash Flow
66
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 942.54M | 912.02M | 835.27M | 973.88M | 973.88M | 924.00M |
| Gross Profit | 265.41M | 254.49M | 195.90M | 316.73M | 316.73M | 385.19M |
| EBITDA | 71.93M | 65.03M | -66.23M | 73.95M | 73.95M | 163.28M |
| Net Income | -30.41M | -37.90M | -137.64M | -28.34M | -28.34M | 62.04M |
Balance Sheet | ||||||
| Total Assets | 2.50B | 2.43B | 2.38B | 2.39B | 2.30B | 1.96B |
| Cash, Cash Equivalents and Short-Term Investments | 334.99M | 309.10M | 180.52M | 71.56M | 65.65M | 113.84M |
| Total Debt | 674.72M | 644.24M | 654.08M | 578.30M | 521.39M | 281.53M |
| Total Liabilities | 1.04B | 961.30M | 906.13M | 824.68M | 767.23M | 470.99M |
| Stockholders Equity | 1.46B | 1.47B | 1.47B | 1.57B | 1.54B | 1.48B |
Cash Flow | ||||||
| Free Cash Flow | 96.22M | 119.05M | 119.05M | 26.09M | -60.05M | -46.52M |
| Operating Cash Flow | 118.69M | 138.85M | 138.85M | 60.38M | -21.25M | -18.87M |
| Investing Cash Flow | -18.06M | -13.50M | -13.50M | -34.29M | -38.56M | -274.32M |
| Financing Cash Flow | -10.10M | 1.41M | 1.41M | 82.68M | 65.43M | 245.75M |
Mercury Systems Technical Analysis
Negative
78.71
Price Trends
88.31
Negative
81.22
Negative
72.70
Positive
Market Momentum
-2.82
Positive
43.07
Neutral
26.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRCY, the sentiment is Negative. The current price of 78.71 is below the 20-day moving average (MA) of 83.45, below the 50-day MA of 88.31, and above the 200-day MA of 72.70, indicating a neutral trend. The MACD of -2.82 indicates Positive momentum. The RSI at 43.07 is Neutral, neither overbought nor oversold. The STOCH value of 26.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRCY.
Mercury Systems Risk Analysis
Mercury Systems disclosed 30 risk factors in its most recent earnings report. Mercury Systems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mercury Systems Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $9.62B | 25.10 | 13.20% | 0.46% | 7.11% | 13.43% | |
67 Neutral | $6.49B | 42.26 | 2.18% | ― | ― | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | $6.01B | 53.70 | 7.41% | 0.89% | -0.37% | -34.97% | |
55 Neutral | $4.47B | -73.03 | -2.08% | ― | 8.63% | 72.72% | |
53 Neutral | $9.80B | -21.68 | -6.41% | ― | 79.89% | -171.81% |
* Industrials Sector Average
MRCY
Mercury Systems
78.71
33.99
76.01%
AVAV
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MOG.A
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305.95
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AMTM
Amentum Holdings, Inc.
26.74
8.29
44.93%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.