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Mercury Adopts Tortuga's Security Solutions for DARPA Program

Zacks Equity Research

Mercury Systems MRCY has adopted cybersecurity company Tortuga Logic’s products to support the development of hardware and software designs for DARPA’s (Defense Advanced Research Projects Agency) Guaranteed Architecture for Physical Security (GAPS) program.

Notably, the GAPS program aims to create hardware security and software architectures, and reduce system complexity.

Radix-S identifies and prevents security gaps in next-generation ASIC, FPGA and System-on-Chip designs. Its patented technology and analysis help detect serious security issues before the device is manufactured, saving costs related to design re-spins or system failure due to an attack. This makes Tortuga Logic's Radix security verification solution a perfect choice for Mercury Systems to effectively provide strong security to make the GAPS program successful.

Mercury Systems Inc Price and Consensus

Mercury Systems Inc Price and Consensus

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

Secure subsystems are very important for the Department of Defense (DoD) to help curb potential opportunities created for cybercriminals to hack into systems, which are too complex to manage, jeopardizing national security.

Notably, Mercury Systems’ secure processing subsystems are leveraged in various Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR); Radar; Electronic Warfare (EW); and other mission-critical applications.

The collaboration between Mercury Systems and Tortuga Logic will lead to the development of powerful security offerings for DARPA's GAPS program.

Efforts in C4ISR Bode Well

Mercury Systems is expected to benefit from high demand for electronic warfare, ISR and other related market segments in the coming years, as it continues to sharpen expertise in design and development of electronic subsystems for these markets.  

The company’s continued efforts and investments, which have resulted in the successful completion of deals, have created about $800 million worth of potential C4I opportunity, based on the estimated lifetime value of its top 30 programs.

Management earlier noted that the C4ISR market and dedicated communications are growing faster than the overall defense space. This is encouraging the company to fortify its footing in these spaces.

Per Zion Market Research, the C4ISR market is expected to witness a CAGR of 3.6% between 2018 and 2024 to reach $127.2 billion globally. Moreover, per Transparency Market Research, the C4ISR market is expected to reach $132.3 billion by 2026, at a CAGR of 3.8% from 2018. These projections make us optimistic about Mercury Systems’ growth prospects.

Notably, in the last reported quarter, Mercury Systems’ revenues from the C4ISR market represented 28% of the total revenues and jumped 11% year over year. Modernization in radar, EW and C4I provided the company with new opportunities in weapon systems, space, avionics processing, mission computing and embedded rugged service.

Zacks Rank and Key Picks

Mercury Systems currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are ManTech International Corporation MANT, SYNNEX SNX and Silicon Motion Technology Corporation SIMO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for ManTech, SYNNEX and Silicon Motion is currently pegged at 8%, 12% and 7%, respectively.

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