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Mercury (MRCY) Secures $13.2 Million Agreement From U.S. Navy
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Mercury Systems (MRCY - Free Report) announced that it has signed a $13.2 million agreement with the U.S. Navy to advance sensor processing technologies, which will allow radar and electronic warfare capabilities to be reduced by a significant time.
Increasing software and system complexity has been extending timelines to develop and launch military platforms for decades. The Office of Naval Research’s Open Rapid Chipletized Approach program is aiming to decrease the time needed to design edge processing solutions. This will be done by increasing the modularity of components at the chip level.
Under this agreement, Mercury will develop a next-generation RF System-in-Package (SiP), which will integrate the latest commercial chips from the largest semiconductor provider within a lighter and smaller footprint.
This agreement would help MRCY build on the RFS1140 SiP, which integrates Jariet Electra-MA high-speed data converters, AMD Versal field-programmable gate array (FPGA) and Micron memory for a comprehensive solution to support sensor processing.
Year-to-date Performance
Image Source: Zacks Investment Research
Mercury’s Other Partnerships to Aid Long-Term Growth Prospects
Mercury’s recent agreement with the U.S. Navy came on the heels of some other notable partnerships, which are expected to aid long-term growth prospects for the company. These partnerships include an agreement with BlueHalo, L3Harris and Lockheed Martin.
MRCY secured a production agreement with BlueHalo to support the U.S. Space Force’s Satellite Communication Augmentation Resource program. The company will provide a FPGA-based common signal acquisition and digital beamforming solution for BlueHalo’s BADGER system.
Mercury also signed a $31 million contract from L3Harris Technologies to provide solid slate data recorders for the U.S. Space Development Agency’s Tranche 2 Tracking Layer satellite constellation. The company’s solid-state data recorders are also the primary storage devices for all three L3Harris constellations.
Earlier this year, MRCY collaborated with Lockheed Martin to advance the defense and manufacturing technologies in Switzerland. This project is a result of a program between Lockheed Martin and the Swiss government as part of Switzerland’s acquisition of the F-35 Lightning II. Under this agreement, Mercury will enable the transfer of two of armasuisses’ key security-relevant technologies–software-defined radio technologies and cryptology–to the Swiss industry.
However, Mercury faces tough competition from Kratos Defense & Security Solutions (KTOS - Free Report) , Lockheed Martin (LMT - Free Report) and Elbit Systems (ESLT - Free Report) in the defense sector.
Mercury’s recent agreements and partnerships are a major positive. However, competition in the defense industry remains a concern.
Additionally, the company is suffering due to increasing operating expenses and margin pressure.
In the third quarter of fiscal 2024, as a percentage of revenues, operating expenses increased 790 basis points to 41.4% from 33.5% in the year-ago quarter.
The Zacks Consensus Estimate for MRCY’s fourth-quarter fiscal 2024 loss per share is pegged at 5 cents, which has widened by a cent in the past 60 days. The consensus mark for fiscal 2024 loss is pegged at 97 cents per share, which has widened by 6 cents in the past 60 days.
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Mercury (MRCY) Secures $13.2 Million Agreement From U.S. Navy
Mercury Systems (MRCY - Free Report) announced that it has signed a $13.2 million agreement with the U.S. Navy to advance sensor processing technologies, which will allow radar and electronic warfare capabilities to be reduced by a significant time.
Increasing software and system complexity has been extending timelines to develop and launch military platforms for decades. The Office of Naval Research’s Open Rapid Chipletized Approach program is aiming to decrease the time needed to design edge processing solutions. This will be done by increasing the modularity of components at the chip level.
Under this agreement, Mercury will develop a next-generation RF System-in-Package (SiP), which will integrate the latest commercial chips from the largest semiconductor provider within a lighter and smaller footprint.
This agreement would help MRCY build on the RFS1140 SiP, which integrates Jariet Electra-MA high-speed data converters, AMD Versal field-programmable gate array (FPGA) and Micron memory for a comprehensive solution to support sensor processing.
Year-to-date Performance
Image Source: Zacks Investment Research
Mercury’s Other Partnerships to Aid Long-Term Growth Prospects
Mercury’s recent agreement with the U.S. Navy came on the heels of some other notable partnerships, which are expected to aid long-term growth prospects for the company. These partnerships include an agreement with BlueHalo, L3Harris and Lockheed Martin.
MRCY secured a production agreement with BlueHalo to support the U.S. Space Force’s Satellite Communication Augmentation Resource program. The company will provide a FPGA-based common signal acquisition and digital beamforming solution for BlueHalo’s BADGER system.
Mercury also signed a $31 million contract from L3Harris Technologies to provide solid slate data recorders for the U.S. Space Development Agency’s Tranche 2 Tracking Layer satellite constellation. The company’s solid-state data recorders are also the primary storage devices for all three L3Harris constellations.
Earlier this year, MRCY collaborated with Lockheed Martin to advance the defense and manufacturing technologies in Switzerland. This project is a result of a program between Lockheed Martin and the Swiss government as part of Switzerland’s acquisition of the F-35 Lightning II. Under this agreement, Mercury will enable the transfer of two of armasuisses’ key security-relevant technologies–software-defined radio technologies and cryptology–to the Swiss industry.
However, Mercury faces tough competition from Kratos Defense & Security Solutions (KTOS - Free Report) , Lockheed Martin (LMT - Free Report) and Elbit Systems (ESLT - Free Report) in the defense sector.
Shares of this Zacks Rank #3 (Hold) company have plunged 18.4% year to date against the Zacks Computer and Technology sector’s growth of 29.4%. It also underperformed KTOS and LMT’s rise of 1.7% and 1.6%, respectively, and ESLT’s decline of 12.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Conclusion
Mercury’s recent agreements and partnerships are a major positive. However, competition in the defense industry remains a concern.
Additionally, the company is suffering due to increasing operating expenses and margin pressure.
In the third quarter of fiscal 2024, as a percentage of revenues, operating expenses increased 790 basis points to 41.4% from 33.5% in the year-ago quarter.
The Zacks Consensus Estimate for MRCY’s fourth-quarter fiscal 2024 loss per share is pegged at 5 cents, which has widened by a cent in the past 60 days. The consensus mark for fiscal 2024 loss is pegged at 97 cents per share, which has widened by 6 cents in the past 60 days.