Shares of Mercury Systems rallied to break out Tuesday after the aerospace and defense technology and services provider received an analyst upgrade and multiple price-target hikes following its Q4 report from late Monday.
Mercury Systems, which provides various subsystems, compute processing and analytics platforms for aerospace and defense firms, reported that earnings more than doubled to 47 cents per share adjusted.
Revenue increased almost 10% to $273.1 million. The results handily beat FactSet expectations for earnings of 22 cents per share on $244 million in revenue.
Mercury reported that total bookings for the quarter were $341.5 million, which marked a record for the period. Its backlog grew 6% from last year to a record $1.4 billion.
Outlook, Upgrade
The company expects 2026 revenue to grow in the low single-digits. Sales for the first half of the year will be relatively flat, with volume increasing sequentially moving through the second half of the year, Mercury said.
The adjusted EBITDA margin for the year is expected to reach midteens. Mercury forecasts low double-digit margins in the first half of the year and expand during the back end of 2026, with Q4's margins expected to be the highest of the year.
The company said it is "optimistic" about achieving its targets for above market top-line growth, adjusted EBITDA margins in the low to mid-20% range, with free cash flow conversion of 50%.
Raymond James upgraded Mercury stock on the report, The Fly reported, to strong buy from outperform. The firm noted that Mercury has the potential to drive EBITDA margin growth of 70% over the next two years, while revenue visibility grows with its backlog strength. Raymond James hiked its price target on shares to 80 from 55.
JPMorgan raised its price target on the stock to 68 from 56 and kept a neutral rating, noting that its 2026 outlook is achievable with potential upside.
Baird lifted its target to 70 from 58 and kept an outperform rating on the shares.
Mercury Systems Stock
MRCY stock bolted nearly 27% Tuesday to power above a 54.32 buy point for an eight-week flat base.
The current pattern is the latest in a series of bullish base-on-base patterns that stretch back to May 2024.
The current flat base's buy zone, which stretches 5% beyond the buy point, extends to 57.03.
Mercury Systems has rallied almost 62% this year.
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