ANDOVER, Mass. - Mercury Systems, Inc. (NASDAQ:MRCY), a leader in mission-critical processing solutions with a market capitalization of $2.56 billion, has secured a $24.5 million contract to provide a data processing and storage subsystem for a U.S. Defense Department satellite program. The company's stock has shown strong momentum, gaining over 28% in the past six months and trading near its 52-week high of $44.62. The company will collaborate with a prime contractor specializing in space systems to supply several subsystems that build upon Mercury's commercial technology and expertise in defense application data management and integration.
The awarded subsystems will feature Mercury's SCFE6933 processing board, which utilizes AMD (NASDAQ:AMD) Versal™ AI Core series FPGAs, and the new RH304T solid-state data recorder. The latter is a radiation-tolerant device with a storage capacity of 4.5 terabytes, designed to function within the harsh conditions of space.
Joe Plunkett, Vice President of Mercury's Advanced Concepts Group, expressed pride in supporting the national security mission, highlighting the versatility of the Mercury Processing Platform's capabilities. According to Plunkett, the platform can be configured in numerous ways to facilitate edge processing for mission-critical operations.
Mercury's Chief Operating Officer, Roger Wells, attributed the contract win to the company's innovative approach and recent organizational restructuring, which he believes has unlocked Mercury's growth potential. According to InvestingPro data, the company maintains strong financial health with a current ratio of 4.1, indicating robust liquidity, and operates with a moderate debt level.
Mercury Systems, headquartered in Andover, Massachusetts, operates globally across 23 locations and is known for its contribution to more than 300 programs in over 35 countries. The company's processing platforms are integral to a wide array of aerospace and defense missions, from sensor processing to command and control. With annual revenue of $858.72 million, Mercury shows promising growth potential, with InvestingPro analysts expecting net income growth this year. For deeper insights into Mercury's financial health and growth prospects, including 8 additional ProTips and comprehensive analysis, explore the complete Pro Research Report available on InvestingPro.
The information for this article is based on a press release statement from Mercury Systems Inc.
In other recent news, Mercury Systems has undergone significant changes in its leadership and financial performance. The company announced the departure of Roger Krone from its Board of Directors, with Jean Bua, the CFO of NetScout Systems (NASDAQ:NTCT) Inc., stepping in as his successor. This reshuffling of the board is part of Mercury's ongoing strategy to enhance its leadership and governance structures.
Mercury Systems recently reported a 29% increase in Q1 bookings, reaching $247.7 million, and a record backlog of over $1.3 billion, a 16% increase from the previous year. The company's revenue for the quarter also rose by 13%, totaling $204.4 million. These positive financial results have led to an upgrade of Mercury Systems' stock rating from Underperform to Hold by Jefferies, who also increased the price target to $42.00.
Despite these positive developments, Jefferies expressed caution regarding Mercury Systems' free cash flow quality, which was described as "extremely weak". However, the firm believes the company's soft guidance for fiscal year 2025, which anticipates flat revenues, low double-digit margins, and increased free cash flow, is achievable. This would set the stage for a normalized fiscal year 2026 with expectations of a 9% revenue increase and 18% margins. These are the latest developments in Mercury Systems' ongoing journey.
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