Mercury (MRCY) Clinches $6.9M Signal Processing Contract

Mercury Systems MRCY has been awarded a $6.9-million contract by a leading defense prime contractor for providing OpenVPX digital signal processing systems for a manned airborne radar application. The order, which was received in the third quarter of fiscal 2022, is anticipated to be delivered over the next few quarters.

Mercury's high-performance signal processing system solutions will ensure mission pilots receive high-resolution data. The data will then provide situational awareness regarding the mission to the pilots.

Back-To-Back Deals

Mercury has been steadily winning multiple development contracts from the federal government. In March, it secured a $165-million indefinite delivery/indefinite quantity contract from the United States Air Force to provide flight data recorders in support of a secure mission data system of the air services' F-16 fleet.

Prior to that, in January, the company received a $17 million contract to provide crucial multi-channel radiofrequency microelectronics to the United States and its allies for the enhancement of missile capabilities.
 

Mercury Systems Inc Price and Consensus

Mercury Systems Inc price-consensus-chart | Mercury Systems Inc Quote

In August 2021, Mercury received a $17 million order from the U.S. Naval Air Warfare Center's Aircraft Division. In July, it teamed up with CoreAVI, winner of the Military and Aerospace Electronics 2017 Innovators Platinum Award, to provide its aerospace and defense customers CoreAVI's safety-certified graphics, video, and GPU compute solutions.

Before that, in June, Mercury achieved a significant milestone with the delivery of more than 1,000 NanoSWITCH rugged network switches to Oshkosh Defense for its Joint Light Tactical Vehicle program.

Mercury's total bookings at the fiscal second quarter-end were $236.9 million, reflecting a book-to-bill ratio of 1.08. The company ended the quarter with a backlog of $953.7 million, up $8.4 million from a year ago. From this backlog, products worth $572.4 million are expected to be shipped within the next 12 months.

Modernization in radar, EW and C4I is high, thus providing the company with new opportunities in weapon systems, space, avionics processing, and mission computing, as well as embedded rugged services.

Mercury's domain expertise in analog and digital integration has helped it build a solid business relationship with defense prime contractors.

However, pandemic-related modernization delays, changes in administration and customer execution issues are likely to continue impacting the company's organic revenue growth in the near term.

Low-margin deals are likely to affect Mercury's profitability despite the steady stream of development contracts from the federal government. Increased investments to expand the business might weigh on the bottom-line results.

Zacks Rank & Key Picks

Mercury currently carries a Zacks Rank #4 (Sell). Shares of MRCY have fallen 13.6% in the past year.

Some better-ranked stocks from the broader computer and technology sector are Axcelis Technologies ACLS sporting a Zacks Rank #1 (Strong Buy), Arrow Electronics ARW and Analog Devices ADI, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Axcelis' first-quarter 2022 earnings has been revised upward by 5 cents to 92 cents per share over the past 60 days. For 2022, Axcelis' earnings estimates have moved north by 12.4% to $3.99 per share in the past 60 days.

Axcelis' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have surged 31.6% in the past year.

The Zacks Consensus Estimate for Arrow Electronics' first-quarter 2022 earnings has been revised upward by 28.7% to $4.53 per share over the past 90 days. For 2022, Arrow Electronics' earnings estimates have moved north by 18.8% to $18.48 per share in the past 60 days.

ARW's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 19%. Shares of Arrow Electronics have fallen 1.3% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 23 cents to $2.08 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 79 cents to $8.32 per share in the past 60 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have climbed 0.5% in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.