Intel stock extends gains after report of possible U.S. government stake
Investing.com -- Raymond James upgraded Mercury Systems (NASDAQ:MRCY) Inc to Strong Buy from Outperform and raised its price target to $80 from $55 given its stronger earnings prospects, rising defense budgets and a steep valuation discount to peers.
The maker of secure computing systems for weapons platforms posted quarterly results that beat expectations and raised its outlook.
The brokerage said Mercury is benefiting from growing global investment in air defense, radar, electronic warfare and space systems, and is “platform agnostic,” allowing it to supply multiple prime contractors.
Raymond (NSE:RYMD) James said Mercury could be the biggest margin expansion story in the defense sector over the next two years, with adjusted EBITDA margins potentially rising about 70%.
It expects revenue growth to accelerate from 2026, supported by a $1.4 billion backlog and potential upside from projects such as Israel’s Iron Dome missile defense system and higher NATO spending.
The firm noted Mercury trades about 10 times below peers on 2026 earnings multiples, despite above-average growth and improving free cash flow.
It forecast revenue of $1.07 billion in fiscal 2027, up 13.6% organically, and adjusted EBITDA margins of 18.8%.
“We see Mercury as a Prime/Platform agnostic provider of trusted/secure compute that enables processing at the edge for major weapons systems that are seeing generational budget increases globally in areas such as Air Defense/Golden Dome/Space/Radar/EW/Cyber,” analysts at Raymond James said.