Mercury Systems stock rating upgraded by RBC Capital on defense potential

Investing.com - RBC Capital upgraded Mercury Systems (NASDAQ:MRCY) from Sector Perform to Outperform on Wednesday, while significantly raising its price target to $90.00 from $55.00. The stock has shown remarkable momentum, delivering a 104% return over the past year and trading near its 52-week high of $78.75. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.

The upgrade comes as RBC Capital views Mercury Systems as "well positioned as a merchant supplier of defense mission-critical processing systems," which should benefit from increased focus on greater defense capabilities.

Despite Mercury’s growth outlook being below its peers, RBC Capital believes the company’s fiscal year 2026 outlook is conservative, leaving room for potential upside.

RBC Capital expects that "increased investor confidence in the margin recovery and working capital release" will support continued positive sentiment toward the stock.

The new $90 price target represents a multiple of 30.5 times the firm’s fiscal year 2027 EBITDA estimate for Mercury Systems.

In other recent news, Mercury Systems has reported several notable developments. The company secured a $12.3 million contract to develop an avionics subsystem for a new U.S. military aircraft, under a three-year agreement with a defense prime contractor. Additionally, Mercury Systems signed a production agreement with AeroVironment to support the U.S. Space Force’s Satellite Communication Augmentation Resource program, expanding on a previous contract for hardware production. Analyst firms have also weighed in on Mercury Systems’ stock. Jefferies raised its price target to $75 from $50, maintaining a Hold rating, citing conservative fiscal year 2026 guidance. In contrast, Goldman Sachs reiterated a Sell rating with a $39 price target, despite Mercury Systems reporting adjusted EBITDA ahead of expectations. Truist Securities increased its price target to $71 from $60, maintaining a Buy rating, following strong fiscal year-end bookings and results that exceeded expectations due to a $30 million revenue pull-forward. These developments highlight Mercury Systems’ ongoing activities and analyst perspectives on its financial outlook.

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