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Investing.com - Raymond James raised its price target on Mercury Systems (NASDAQ:MRCY) to $100.00 from $80.00 on Wednesday, while maintaining a Strong Buy rating on the defense technology company. Mercury’s stock has delivered an impressive 121.44% return over the past year, with shares currently trading at $76.35, according to InvestingPro data. Despite this strong performance, the company appears significantly overvalued compared to its InvestingPro Fair Value.
The price target increase follows what Raymond James described as an "emphatic" fiscal first-quarter 2026 beat that confirms Mercury’s fundamental momentum. The company exceeded expectations across revenue, margins, and cash flow metrics.
Raymond James highlighted Mercury as "the best margin expansion story in defense," noting it has potential to drive EBITDA margin growth of approximately 70%. The firm’s refreshed model lifts FY26/FY27 forecasts above management’s guidance. InvestingPro data shows that while Mercury is not profitable over the last twelve months with a diluted EPS of -$0.65, analysts forecast EPS of $0.99 for fiscal year 2026, supporting Raymond James’ optimistic outlook.
The investment firm views Mercury as a "Prime/Platform agnostic provider of trusted/secure compute" that enables processing at the edge for major weapons systems experiencing significant global budget increases in areas including Air Defense, Space, Radar, and Cyber.
Raymond James also cited increasing revenue visibility as a key factor in its bullish outlook, pointing to backlog strength, a strong bid pipeline, and Mercury’s ability to execute as signals of potential upside through calendar years 2026 and 2027.
In other recent news, Mercury Systems Inc. reported its first fiscal quarter earnings for 2026, significantly surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.26, compared to the forecasted $0.09, marking a surprise of nearly 189%. Revenue also exceeded predictions, reaching $225.2 million against the anticipated $206.03 million. These results highlight a strong performance for Mercury Systems in the recent quarter. Despite the positive earnings report, the company’s stock experienced a decrease during regular trading hours. Additionally, the stock saw a slight increase in after-hours trading. These developments provide valuable insights for investors regarding Mercury Systems’ recent financial performance.
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