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Mercury Systems (MRCY) Clinches $14M SiP Assemblies Contract

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Mercury Systems MRCY has been awarded a $14-million contract by a leading defense prime contractor for providing system-in-package (SiP) assemblies for an airborne secure processing application. The order, received in the third quarter of fiscal 2022, is anticipated to be delivered over the next few quarters.

The latest agreement showcases the credibility of Mercury's advanced SiP assemblies across the defense sector. The high-performance solution will enable new sensor processing applications for various defense platforms and programs. It reflects the company’s deep commitment toward transforming the U.S Department of Defense while ensuring commercial technology’s availability across the sector.

Back-to-Back Deals

Mercury has been steadily winning multiple development contracts from the federal government. Recently, it won a $6.9-million contract from a leading defense prime contractor for providing OpenVPX digital signal processing systems for a manned airborne radar application. In March, it secured a $165-million indefinite delivery/indefinite quantity contract from the United States Air Force to provide flight data recorders to support a secure mission data system of the air services' F-16 fleet.

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

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.

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.

In June 2021, 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 rapid, 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-induced modernization delays and 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 declined 21.9% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Arista Networks ANET and Gogo GOGO, each sporting a Zacks Rank #1 (Strong Buy), and Analog Devices ADI carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks' first-quarter 2022 earnings has been revised upward by 4 cents to 81 cents per share over the past 60 days. For 2022, earnings estimates have moved 4.5% north to $3.69 per share in the past 60 days.

Arista Networks' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of ANET have rallied 66.9% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised a penny downward to 13 cents per share over the past seven days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 117.6% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past seven days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past seven 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 fallen 1.6% in the past year.


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