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Mercury Systems
(NASDAQ:MRCY)
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Rating:57Neutral
Price Target:
$78.00
▼(-11.10% Downside)
Action:Reiterated
Date:09/19/26
The score reflects improving financial trajectory and strong forward demand/backlog visibility, but it is capped by ongoing GAAP losses/negative ROE and weaker current technical momentum. Valuation is also constrained by a negative P/E and lack of a dividend signal, while recent corporate updates are mildly positive.
Positive Factors
Backlog Visibility
Record bookings and a growing backlog provide meaningful multiyear revenue visibility for a defense electronics business. The strong book-to-bill ratio and expanded near-term backlog support continued workload, improve planning confidence, and create a solid base for converting demand into future sales.
Negative Factors
Persistent GAAP Losses
Continued GAAP losses show that improving revenue and adjusted profitability have not yet translated into sustainable bottom-line earnings. Persistent losses weaken returns on equity, limit internally generated capital, and leave the long-term quality of earnings dependent on further execution improvements.
Read all positive and negative factors
Positive Factors
Negative Factors
Backlog Visibility
Record bookings and a growing backlog provide meaningful multiyear revenue visibility for a defense electronics business. The strong book-to-bill ratio and expanded near-term backlog support continued workload, improve planning confidence, and create a solid base for converting demand into future sales.
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.
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The Fly
The FlyMercury Systems (MRCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.54B
Dividend Yield3.82%
Average Volume (3M)606.54K
Price to Earnings (P/E)―
Beta (1Y)1.40
Revenue Growth7.85%
EPS Growth22.99%
CountryUS
Employees2,102
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)-0.50
Shares Outstanding60,863,586
10 Day Avg. Volume510,725
30 Day Avg. Volume606,538
Financial Highlights & Ratios
PEG Ratio10.94
Price to Book (P/B)5.01
Price to Sales (P/S)7.63
P/FCF Ratio110.22
Enterprise Value/Market Cap1.77
Enterprise Value/Revenue8.15
Enterprise Value/Gross Profit30.58
Enterprise Value/Ebitda105.40
Forecast
1Y Price Target
$111.30Price Target Upside26.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)1.67
Revenue Forecast (FY)$1.09B
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...
Mercury Systems Earnings Call Summary
Earnings Call Date:Aug 18, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 10, 2026
Earnings Call Sentiment Positive
The call emphasized substantial operational momentum: record bookings, backlog and quarterly revenue, improved full-year adjusted EBITDA and margin expansion, broad-based demand (notably CPA), and raised growth targets for FY2027/FY2028. Offsetting these positives were weaker GAAP results, quarter-to-quarter adjusted EBITDA/margin softness, a meaningful drop in year-over-year free cash flow, temporary international delivery/ramp issues, and planned near-term investments that will depress FY2027 cash conversion. On balance the company presented strong demand and execution progress and provided a constructive outlook while flagging near-term cash and margin volatility tied to investments and backlog conversion dynamics.Positive Updates
Record bookings and backlog
Q4 bookings of $660M (up ~93.1% YoY) and record fiscal year bookings of ~$1.5B (up ~49.8% YoY). Total backlog over $1.9B (up ~38.4% YoY) and record next-12-month backlog of ~ $1.0B (up ~23.3% YoY). Q4 book-to-bill ~2.28 and FY book-to-bill 1.57, providing enhanced multiyear visibility.
Negative Updates
Decline in GAAP profitability and Q4 GAAP results
Q4 GAAP net income of ~$1M and EPS ~$0.01 vs prior-year Q4 GAAP net income ~$16M and EPS $0.27. Fiscal 2026 GAAP net loss approximately $30M (deterioration vs prior year). Management highlights non-GAAP improvements, but GAAP results remain a short-term weakness.
Read all updates
Q4-2026 Updates
Positive
Negative
Record bookings and backlog
Q4 bookings of $660M (up ~93.1% YoY) and record fiscal year bookings of ~$1.5B (up ~49.8% YoY). Total backlog over $1.9B (up ~38.4% YoY) and record next-12-month backlog of ~ $1.0B (up ~23.3% YoY). Q4 book-to-bill ~2.28 and FY book-to-bill 1.57, providing enhanced multiyear visibility.
Read all positive updates
Company Guidance
Mercury guided FY2027 revenue "approaching $1.1 billion," implying revenue growth approaching double digits year‑over‑year (with Q1 the low point and expected to be up high single digits y/y), and forecasted adjusted EBITDA approaching $200 million (nearly 30% y/y growth) with adjusted EBITDA margin in the high teens initially and rising through the year (Q1 margin roughly in line with Q1 FY26); management plans targeted investments in inventory, automation and factory optimization, expects FY27 free cash‑flow conversion to be beneath its 50% target (approaching ~35%) with a larger Q1 cash outflow and stronger FCF in H2, and cited the record backlog (> $1.9B) and ~$1.0B next‑12‑month backlog as the basis for increased visibility; longer‑term reference points for FY2028 call for low‑double‑digit organic growth, adjusted EBITDA margin at the low end of the company’s target (low‑to‑mid‑20s), and a return toward ~50% free‑cash‑flow conversion.Mercury Systems Financial Statement Overview
Summary
Income Statement
45
Neutral
Balance Sheet
68
Positive
Cash Flow
61
Positive
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 983.62M | 912.02M | 835.27M | 973.88M | 973.88M |
| Gross Profit | 242.26M | 254.49M | 195.90M | 316.73M | 316.73M |
| EBITDA | 93.63M | 65.03M | -66.23M | 73.95M | 73.95M |
| Net Income | -29.67M | -37.90M | -137.64M | -28.34M | -28.34M |
Balance Sheet | |||||
| Total Assets | 2.32B | 2.43B | 2.38B | 2.39B | 2.30B |
| Cash, Cash Equivalents and Short-Term Investments | 214.31M | 309.10M | 180.52M | 71.56M | 65.65M |
| Total Debt | 487.33M | 644.24M | 654.08M | 578.30M | 521.39M |
| Total Liabilities | 825.32M | 961.30M | 906.13M | 824.68M | 767.23M |
| Stockholders Equity | 1.50B | 1.47B | 1.47B | 1.57B | 1.54B |
Cash Flow | |||||
| Free Cash Flow | 68.09M | 119.05M | 119.05M | 26.09M | -60.05M |
| Operating Cash Flow | 102.39M | 138.85M | 138.85M | 60.38M | -21.25M |
| Investing Cash Flow | -35.72M | -13.50M | -13.50M | -34.29M | -38.56M |
| Financing Cash Flow | -162.74M | 1.41M | 1.41M | 82.68M | 65.43M |
Mercury Systems Technical Analysis
Negative
87.74
Price Trends
85.24
Negative
96.93
Negative
92.08
Negative
Market Momentum
-3.02
Positive
36.93
Neutral
41.80
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 87.74 is above the 20-day moving average (MA) of 79.13, above the 50-day MA of 85.24, and below the 200-day MA of 92.08, indicating a bearish trend. The MACD of -3.02 indicates Positive momentum. The RSI at 36.93 is Neutral, neither overbought nor oversold. The STOCH value of 41.80 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 34 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | $11.55B | 30.84 | 18.00% | 0.32% | 15.65% | 78.52% | |
75 Outperform | $9.06B | 28.28 | 11.76% | 1.06% | 10.46% | 28.28% | |
71 Outperform | $46.32B | 24.85 | 9.41% | 2.00% | 7.29% | 10.75% | |
67 Neutral | $18.29B | 33.83 | 20.69% | 0.20% | 10.54% | 22.56% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
57 Neutral | $4.54B | -149.54 | -2.01% | 3.82% | 7.85% | 22.99% | |
54 Neutral | $7.31B | 225.36 | 1.14% | ― | 25.50% | 86.96% |
* Industrials Sector Average
MRCY
Mercury Systems
75.56
-2.04
-2.63%
CW
Curtiss-Wright
474.28
-83.71
-15.00%
LHX
L3Harris Technologies
254.23
-34.26
-11.88%
KTOS
Kratos Defense
38.27
-51.05
-57.15%
MOG.A
Moog
341.71
131.79
62.78%
DRS
Leonardo Drs
34.30
-5.88
-14.64%
Mercury Systems Corporate Events
Legal Proceedings
Mercury Systems Secures Preliminary Approval of Derivative Settlement
Positive
Sep 18, 2026
Mercury Systems, a technology company, has been involved in stockholder derivative actions in the Essex County Superior Court for the Commonwealth of Massachusetts. These actions, captioned Jones v. Aslett, et al. and McKinnon vs. Aslett, et al., ...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Mercury Systems Reaffirms Outlook and Highlights Growth Visibility
Positive
Sep 16, 2026
On September 15, 2026, Mercury Systems’ independent directors approved an amendment extending Chairman and CEO William L. Ballhaus’s employment agreement through August 15, 2030, with all other terms unchanged. The move confirms the bo...
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.