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ANDOVER, Mass. - Mercury Systems, Inc. (NASDAQ:MRCY), a defense technology company with annual revenue of $887 million and market capitalization of approximately $3 billion, announced Wednesday it has signed two agreements with a European defense prime contractor to expand production of processing subsystems and components for radar and electronic warfare missions. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.44, positioning it well for expansion.
In June, Mercury extended a decades-long customer relationship through a five-year agreement to enable faster, higher-volume production of sensor processing subsystems powered by its HDS6605 6U OpenVPX multiprocessing boards for various radar systems.
Earlier this month, the company signed a second agreement with the same customer to deliver Monolithic Microwave Integrated Circuit (MMIC) products supporting electronic warfare sensors. Mercury’s mini-tuner modules and amplifiers will help convert analog RF signals for these systems.
"We are strengthening our commitment to the European defense sector by making investments to reduce development and production timelines for our unique processing products and solutions," said Paul Tanner, Vice President of Mercury International.
The agreements come amid increased defense activity in Europe. Mercury’s processing technologies are currently deployed in more than 300 programs across 35 countries, according to the company’s press release statement.
Mercury Systems, headquartered in Andover, Massachusetts, specializes in mission-critical processing technologies for aerospace and defense applications.
In other recent news, Mercury Systems has reported its third-quarter earnings for fiscal year 2025, revealing a significant miss in earnings per share (EPS) compared to forecasts. The company posted an EPS of -$0.33, falling short of the anticipated $0.10. However, Mercury Systems exceeded revenue expectations, reporting $211 million, which surpassed the forecasted $205.88 million and marked a 1.5% year-over-year increase. In related developments, the company secured an $8.5 million contract from the U.S. Department of Defense to develop advanced radio frequency technology, reflecting confidence in its innovative capabilities.
Analysts have responded with mixed adjustments to Mercury Systems’ stock price targets. Truist Securities raised its price target to $60, maintaining a Buy rating, citing optimism about the company’s operational improvements and strategic direction. Raymond James also increased its price target to $55, highlighting the company’s recent financial results, which exceeded expectations. Meanwhile, RBC Capital Markets adjusted its price target to $50, noting Mercury Systems’ progress in enhancing its financial framework despite the earnings miss.
The company’s adjusted EBITDA for the quarter was $24.7 million, representing an 11.7% margin, outperforming expectations by 6%. Mercury Systems also reported strong free cash flow of $24.1 million for the quarter, which was notably better than consensus expectations. The company continues to make strides in operational efficiency and financial performance, with a positive outlook for fiscal year 2026.
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