Mercury (MRCY) to Supply Electronic Warfare Training Subsystems

Mercury Systems MRCY has secured a significant five-year contract worth $243.8 million from the US Navy. This indefinite delivery/indefinite quantity contract is set to supply rapidly reprogrammable electronic attack training subsystems for the Naval Air Warfare Center Weapons Division.

Leveraging more than 25 years of test and training technology from the Mercury Processing Platform, these subsystems aim to provide cutting-edge jamming and electronic warfare capabilities to US pilot training organizations.

Mercury’s digital RF memory (DRFM)-based reactive jamming subsystems offer flexibility, enabling training planners to quickly reprogram missions across various aircraft through an intuitive software interface.

Moreover, these systems can simulate multiple threats validated by the National Air and Space Intelligence Center. The company has a long standing history of providing radar jamming capabilities to the Navy’s Airborne Threat Simulation Organization (“ATSO”), with more than 600 systems delivered in the past decade.

MRCY initially received a $20.3 million production order for DRFM from ATSO, marking the commencement of this contract. Additionally, the agreement encompasses ongoing engineering services to continuously update the system’s threat library to effectively counter adversarial capabilities.

MRCY’s Recent Deal to Aid Top-Line Growth

Mercury recently inked a significant three-year subcontract worth $96 million with Raytheon. This agreement entails the delivery of high-performance signal processing subsystems for the US Army’s Lower Tier Air and Missile Defense Sensor (“LTAMDS”). MRCY will provide hardware to support the production of the next nine LTAMDS radars, which will serve the US Army and Poland, marking the first international LTAMDS customer.

LTAMDS, featuring a 360-degree Active Electronically Scanned Array, offers enhanced capacity and capability against a broad spectrum of advanced threats, including hypersonic missiles. Mercury’s development of an advanced and edge-ready processing solution for LTAMDS is poised to grant both US and international forces an unparalleled strategic and tactical advantage on the battlefield. This is expected to boost top-line growth in the coming quarters.

The Zacks Consensus Estimate for MRCY’s 2024 revenues is pegged at $812.17 million, indicating a year-over-year decrease of 16.61%. The consensus mark for loss is pegged at 64 cents per share, indicating a year-over-year decline of 164%.

Shares of this Zacks Rank #5 (Strong Sell) company have lost 18.7% year to date against the Zacks Computer and Technology sector’s growth of 9.9% due to stiff competition in the market from Kratos Defense & Security Solutions KTOS, Lockheed Martin LMT and Elbit Systems ESLT.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kratos Defense & Security Solutions is a technology company based in San Diego, CA. It focuses on various areas such as directed-energy weapons, unmanned systems, satellite communications, cybersecurity, microwave electronics, missile defense and training systems. KTOS’ customers include the US federal government, other governments worldwide, businesses and state/local agencies.

Lockheed Martin, an American conglomerate, operates globally in the aerospace, defense, information security and technology sectors. The company was established through the merger of Lockheed Corporation and Martin Marietta in March 1995. Recognized as one of the leading firms in aerospace, military support, security and technology, Lockheed Martin holds a prominent position in these industries.

Elbit Systems is a company from Israel that focuses on making military technology and equipment. It was founded in 1966 and is known for providing land-based equipment and unmanned aerial vehicles to the Israeli military. ESLT has factories in different countries and sells its products to many militaries worldwide.

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