Cardiff Oncology shares plunge after Q2 earnings miss
On Wednesday, Baird, a financial services firm, raised the price target on shares of Mercury Systems (NASDAQ:MRCY) to $37.00, up from the previous target of $26.00. Despite the increase, the firm maintained a Neutral rating on the stock.
The adjustment follows Mercury Systems' recent financial performance, which included a solid earnings per share (EPS) beat and record free cash flow (FCF) generation. The analyst at Baird acknowledged these achievements but noted that fiscal year 2025 is seen as a transitional period for the company. During the first half of FY25, margin pressures are expected due to certain challenging programs.
Looking ahead, the analyst anticipates a more favorable environment for Mercury Systems by fiscal year 2026. The company is expected to overcome technical risks associated with margin dilutive development programs by that time. This is predicted to result in improved factory output, program mix, billings, and subsequent cash collection.
Despite the optimistic outlook for FY26, the firm requires further evidence that Mercury Systems is on a sustainable path to improved margins and FCF generation. The analyst underscored the need for more concrete signs of financial recovery before adopting a more positive stance on the stock.
In other recent news, Mercury Systems outperformed market expectations with its fourth-quarter financial results. The company reported adjusted earnings per share at $0.23, a significant improvement compared to analyst estimates of a $0.06 loss per share.
Revenue reached $248.6 million, surpassing the forecasted $231.02 million. However, for the full fiscal year 2024, the company reported a decrease in revenue to $835.3 million from $973.9 million in fiscal 2023, and an adjusted loss per share of $0.69.
In addition to financial results, Mercury Systems reported a rise in its book-to-bill ratio to 1.14 for the quarter, with total bookings valued at $284.4 million. The company's backlog also grew, reaching a record $1.3 billion, a 16% year-over-year increase. Free cash flow for the fourth quarter was $61.4 million, a significant rise from the previous year's $3.8 million.
Truist Securities raised its price target on Mercury Systems to $31 from $26, maintaining a Hold rating on the stock. This revision follows Mercury Systems' strong financial performance and comes despite the company's fiscal year 2025 guidance suggesting flat revenues.
The company's ongoing operational improvements and the expected full production of its Cross Program Analysis in the first half of fiscal year 2025 are among recent developments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.