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Mercury (MRCY) Grabs Radar Testing System Deal From Leonardo UK

·4 min read

Mercury Systems MRCY recently secured a contract to provide radar testing and simulation systems for the Rome-based aerospace and defense contractor, Leonardo UK. However, the company didn’t disclose the financial terms of the deal.

Leonardo is an Italian multinational company that specializes in aerospace, defense and security. The company is among the world’s ten largest defense contractors in terms of revenues and has a significant industrial presence in Italy, the United Kingdom, Poland and the United States.

Per the agreement, Mercury’s radar testing and simulation systems will be used to factory test Leonardo’s innovative E-scan radar, which is being developed in the United Kingdom. The latest deal follows a previous contract awarded to MRCY in 2019 to design and manufacture advanced processing technology for Leonardo’s E-Scan radar.

Mercury Systems Inc Price and Consensus

Mercury Systems Inc Price and Consensus
Mercury Systems Inc Price and Consensus

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

Mercury's radar simulation solutions enable testing and validation of radar systems in a safe and secure lab environment, thereby saving customers money and time. The company claims that the simulator is capable of providing faster and accurate results, which lowers the cost and ensures aircrew safety.

Mercury’s sustained focus on developing safe and secure testing and simulation solutions has positioned it as one of the most preferred choices by aerospace and defense contractors. Last week, the company announced that its rapidly reprogrammable electronic attack (“EA”) training system — mPOD — is undergoing final flight testing.

The mPOD is a jammer training pod designed to train, test and evaluate military pilots for combats in electromagnetic environments. It simulates realistic adversary jamming threats to better prepare U.S pilots by forming unique strategies to gain an advantage over adversaries. This solution offers integrated threat presentations, which drastically reduce training costs for the U.S Air Force and the Navy.

Mercury’s new EA training system can emulate multiple National Air and Space Intelligence Center-validated enemy jamming techniques with accuracy. It comes with Filthy Buzzard digital radio frequency memory technology and requires little or no tuning by engineers or technicians.

Continuous Flow of Contracts

Mercury has been benefiting from modernization in radar, electronic warfare and C4I, which is providing it with new opportunities in weapon systems, space, avionics processing, mission computing and embedded rugged services. Its domain expertise in analog and digital integration has helped it build a solid business relationship with defense and aerospace prime contractors for a long time.

In June, the company was chosen by Ball Corporation’s BALL wholly owned subsidiary, Ball Aerospace, to enhance the data recording and storage performance of a methane monitoring satellite, MethaneSAT. Integrating Mercury's RH3440 3U VPX high-density solid-state data recorder, Ball Aerospace’s MethaneSAT spectrometer intends to enable the satellite to gather critical data to solve environmental sustainability issues.

In May, MRCY entered a multi-year agreement to collaborate with Lockheed Martin LMT to develop and manufacture new sensor processing technologies at its Geneva-based facility to address the mission-critical needs of the aerospace and defense industry.

Through the $40-million worth contract, Mercury and Lockheed Martin intend to deliver the world’s most advanced airborne defense systems to Switzerland and other countries. It is noteworthy that Mercury’s continued efforts and investments have resulted in the successful completion of deals and created about $800 million worth of potential C4I opportunities based on the estimated lifetime value of its top 30 programs.

Zacks Rank & Another Stock to Consider

Currently, Mercury sports a Zacks Rank #1 (Strong Buy), while Ball and Lockheed Martin each carry a Zacks Rank #3 (Hold). Shares of MRCY and LMT have risen 11% and 11.2%, respectively, year to date (“YTD”). BALL stock has plunged 26.5% during the same time frame.

Another similar-ranked stock worth considering from the broader technology sector is Broadcom AVGO. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom's third-quarter fiscal 2022 earnings has been revised upward by 9.9% to $9.62 per share over the past 60 days. For fiscal 2022, the Zacks Consensus Estimate for Broadcom's earnings has moved north by 10 cents to $37.06 per share in the past 30 days.

Broadcom's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 2.2%. Shares of AVGO have plunged 23% YTD.

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