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Mercury Systems
(NASDAQ:MRCY)
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Rating:62Neutral
Price Target:
$134.00
▲(59.43% Upside)
Action:Reiterated
Date:06/06/26
The score is driven primarily by improving fundamentals and supportive earnings-call momentum (raised guidance, record bookings/backlog, and expanding adjusted margins), balanced by the fact that GAAP profitability is still negative and free cash flow has softened versus the prior period. Technicals are strong but look overbought, while valuation provides limited support due to the negative P/E and no dividend yield.
Positive Factors
Record bookings & backlog
Large, growing backlog and record bookings provide durable multi-year revenue visibility tied to defense production cycles. Higher book-to-bill (1.48) means stronger backlog conversion potential, reducing near-term revenue volatility and supporting capacity planning and sustained program deliveries.
Negative Factors
GAAP profitability still negative
Although operating metrics improved, continued GAAP losses mean returns to shareholders and ROE remain impaired and the company has not fully converted adjusted gains into GAAP profitability. This prolongs the timeline to consistent net income and constrains retained-earnings accumulation.
Read all positive and negative factors
Positive Factors
Negative Factors
Record bookings & backlog
Large, growing backlog and record bookings provide durable multi-year revenue visibility tied to defense production cycles. Higher book-to-bill (1.48) means stronger backlog conversion potential, reducing near-term revenue volatility and supporting capacity planning and sustained program deliveries.
Read all positive factors
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 (MRCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.58B
Dividend YieldN/A
Average Volume (3M)688.80K
Price to Earnings (P/E)―
Beta (1Y)1.27
Revenue Growth8.95%
EPS Growth78.82%
CountryUS
Employees2,364
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)-0.85
Shares Outstanding60,043,280
10 Day Avg. Volume781,865
30 Day Avg. Volume688,803
Financial Highlights & Ratios
PEG Ratio1.13
Price to Book (P/B)2.13
Price to Sales (P/S)3.44
P/FCF Ratio26.36
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue7.51
Enterprise Value/Gross Profit27.10
Enterprise Value/Ebitda82.13
Forecast
1Y Price Target
$98.60Price Target Upside17.31% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)1.54
Revenue Forecast (FY)$1.05B
Mercury Systems Business Overview & Revenue Model
Company Description
Mercury Systems, Inc. is a technology firm dedicated to the creation and delivery of a wide range of advanced components, modules, and integrated subsystems, primarily catering to the aerospace and defense industries. The company's operations span...
How the Company Makes Money
Mercury Systems makes money primarily by selling defense electronics hardware, subsystems, and related services to U.S. defense prime contractors, the U.S. government, and other aerospace and defense customers. Its revenue model is largely program...
Mercury Systems Earnings Call Summary
Earnings Call Date:May 05, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Aug 18, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum and financial improvement: record bookings/backlog, double-digit organic revenue growth, material adjusted EBITDA expansion, balance sheet strength and capacity investments. Near-term challenges include a slight Q3 free cash flow outflow, working capital and receivable timing dynamics, inventory reserve impacts, and the fact that larger market tailwinds are not yet baked into bookings. Management raised FY'26 guidance and emphasized improved backlog conversion and margin trajectory, while acknowledging more work is required to reach longer-term margin targets.Positive Updates
Record Bookings and Backlog
Q3 bookings of $348.3M (book-to-bill of 1.48); record backlog approaching $1.6B (up $240M or ~17.9% year over year); trailing twelve-month bookings a record $1.23B.
Negative Updates
Q3 Free Cash Flow Outflow and Volatility
Q3 free cash flow was a slight outflow (~$1.8M–$2M) versus a $24M inflow a year ago; company expected a Q3 outflow but only partially mitigated it despite improved collections.
Read all updates
Q3-2026 Updates
Positive
Negative
Record Bookings and Backlog
Q3 bookings of $348.3M (book-to-bill of 1.48); record backlog approaching $1.6B (up $240M or ~17.9% year over year); trailing twelve-month bookings a record $1.23B.
Read all positive updates
Company Guidance
Mercury raised its FY‑2026 outlook, now expecting annual revenue growth approaching mid‑single‑digits (up from low‑single‑digits), full‑year adjusted EBITDA margin in the mid‑teens (up from “approaching mid‑teens”), and positive free cash flow in Q4 (and positive for the year), while reiterating a longer‑term target of above‑market top‑line growth, adjusted EBITDA margins in the low‑to‑mid‑20% range and 50% free‑cash‑flow conversion; management said this upgrade reflects improved backlog conversion and material staging and potential upside from stronger Q4 bookings and defense tailwinds. The guidance is supported by Q3 operating metrics: record bookings of $348.3M (book‑to‑bill 1.48), trailing‑12‑month bookings of $1.23B, backlog approaching $1.6B (backlog +17.9% YoY; 12‑month backlog +10.3% sequential), Q3 revenue ~$235.8M (+11.5% organic YoY), adjusted EBITDA ~$36.1M (15.3% margin; +46% YoY; +360 bps YoY), gross margin 29.3% (+230 bps YoY), Q3 free cash outflow ~$(1.8)M, cash on hand ~$332M, net debt ~$259.7M, net working capital ~$4.344B (down ~4.1% YoY), and year‑to‑date free cash flow of $39.5M.Mercury Systems Financial Statement Overview
Summary
Income Statement
46
Neutral
Balance Sheet
67
Positive
Cash Flow
58
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 966.95M | 912.02M | 835.27M | 973.88M | 973.88M | 924.00M |
| Gross Profit | 267.79M | 254.49M | 195.90M | 316.73M | 316.73M | 385.19M |
| EBITDA | 88.36M | 65.03M | -66.23M | 73.95M | 73.95M | 163.28M |
| Net Income | -14.10M | -37.90M | -137.64M | -28.34M | -28.34M | 62.04M |
Balance Sheet | ||||||
| Total Assets | 2.48B | 2.43B | 2.38B | 2.39B | 2.30B | 1.96B |
| Cash, Cash Equivalents and Short-Term Investments | 331.80M | 309.10M | 180.52M | 71.56M | 65.65M | 113.84M |
| Total Debt | 653.95M | 644.24M | 654.08M | 578.30M | 521.39M | 281.53M |
| Total Liabilities | 1.00B | 961.30M | 906.13M | 824.68M | 767.23M | 470.99M |
| Stockholders Equity | 1.48B | 1.47B | 1.47B | 1.57B | 1.54B | 1.48B |
Cash Flow | ||||||
| Free Cash Flow | 70.34M | 119.05M | 119.05M | 26.09M | -60.05M | -46.52M |
| Operating Cash Flow | 95.15M | 138.85M | 138.85M | 60.38M | -21.25M | -18.87M |
| Investing Cash Flow | -24.52M | -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
Positive
84.05
Price Trends
100.51
Positive
91.39
Positive
85.29
Positive
Market Momentum
4.81
Negative
68.38
Neutral
90.90
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRCY, the sentiment is Positive. The current price of 84.05 is below the 20-day moving average (MA) of 113.87, below the 50-day MA of 100.51, and below the 200-day MA of 85.29, indicating a bullish trend. The MACD of 4.81 indicates Negative momentum. The RSI at 68.38 is Neutral, neither overbought nor oversold. The STOCH value of 90.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $13.26B | 46.43 | 14.06% | 0.46% | 13.79% | 37.64% | |
64 Neutral | $5.19B | 35.40 | 3.27% | ― | 26.11% | 801.19% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $7.58B | -148.80 | -0.96% | ― | 8.95% | 78.82% | |
60 Neutral | $7.49B | 65.34 | 8.35% | 0.89% | 1.46% | -0.14% | |
55 Neutral | $9.66B | -41.23 | -6.41% | ― | 140.89% | -448.13% |
* Industrials Sector Average
MRCY
Mercury Systems
126.21
74.78
145.40%
AVAV
AeroVironment
190.89
-55.34
-22.47%
HXL
Hexcel
99.31
42.54
74.92%
MOG.A
Moog
417.42
233.12
126.48%
AMTM
Amentum Holdings, Inc.
21.24
-2.96
-12.23%
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.