Mercury Systems, Inc. MRCY recently launched a modular, open-system spectrum processing platform — Rappid — to develop a wide range of electronic warfare (EW), signal intelligence and software-defined radio applications.
This application-ready platform is highly scalable, mitigates integration costs and enables new technologies to roll out faster. This will help Mercury’s customers rapidly deploy the latest EW technology wherever required and respond quickly to evolving adversary threats while saving significant costs.
Mercury’s chief technology officer, Dr. Bill Conley, noted, “This transformative innovation supports our national objectives articulated in the DoD’s 2020 Electromagnetic Spectrum (EMS) Superiority Strategy by improving the agility of our systems.”
Notably, Rappid enables system developers to run the same software and firmware that develops current EW systems, on different hardware. This eliminates the necessity to upgrade the technology continuously, which is critical to developers as each new upgrade requires the development of the new software from scratch.
Mercury Systems Inc Price and Consensus
Mercury Systems Inc price-consensus-chart | Mercury Systems Inc Quote
Expanding EW Portfolio — A Tailwind
Notably, modernization in radar, electronic warfare and C4I is high, providing Mercury with new opportunities in weapon systems, space, avionics processing, and mission computing and embedded rugged service.
Moreover, the company is expected to benefit from high demand for electronic warfare, ISR and other related market segments in the coming years, as it continues to hone its expertise in the design and development of electronic subsystems for these markets. The company works with a number of key defense prime contractors on a regular basis, which should ensure a healthy flow of orders.
Additionally, the long-term DoD budget pressure, due to the two-year Budget Control Act, additional expenditures creeping into the Overseas Contingency Operations account, flat budget growth and like, is making more and more contractors opt for upgrades of the electronic subsystems on existing platforms. This is expected to increase the demand for the company’s cost-effective and open-architecture products.
Markedly, Mercury has been focused on the EW segment with innovation and products. Its OpenVPX standard-based EnsembleSeries DCM6111 6U VPX digital transceiver, which incorporates the BuiltSECURE technology, is gaining solid traction among defense customers. It is suitable for advanced EW applications operating in high threat areas.
Notably, Mercury was also involved in two major programs related to SEWIP (Surface Electronic Warfare Improvement Program) — SEWIP Block 2 and SEWIP Block 3. Management stated that Block 2 is a well-funded program and one of its largest revenue drivers.
Moreover, the Syntonic Microwave and The Athena Group buyouts have expanded Mercury’s capabilities in EW and embedded security.
Notably, per MarketsandMarkets, the electronic warfare market size is expected to reach $20.9 billion by 2025, witnessing a CAGR of 4.2% from 2020. This projection is encouraging for Mercury, which is one of the world’s leading providers of sensor and safety-critical mission processing subsystems.
Zacks Rank & Other Stocks to Consider
Mercury currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA, Micron Technology, Inc. MU and Etsy, Inc. ETSY, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for NVIDIA, Micron and Etsy is currently pegged at 15.05%, 15.66% and 19.43%, respectively.
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