What Happened?
Shares of aerospace and defense company Mercury Systems (NASDAQ:MRCY)
jumped 3.6% in the afternoon session after the company announced it signed two agreements with a major European defense prime contractor to expand and accelerate the production of critical technology for radar and electronic warfare missions.
The deal strengthens Mercury's foothold in the European defense market and provides improved revenue visibility. The first agreement is a five-year contract to increase the production of sensor processing subsystems for various radar systems. The second expands an existing deal for Monolithic Microwave Integrated Circuit (MMIC) products, which are essential components for electronic warfare sensors that capture and convert radio frequency signals. These agreements build on a long-standing relationship with the unnamed European contractor and underscore the growing demand for advanced, secure processing capabilities in the defense sector.
After the initial pop the shares cooled down to $51.80, up 3.5% from previous close.
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What Is The Market Telling Us
Mercury Systems’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 21.9% on the news that the company reported strong second-quarter 2024 earnings. Mercury Systems blew past analysts' revenue, EPS, and free cash flow expectations. Its backlog, an indicator of future sales, also outperformed Wall Street's estimates. Zooming out, we think this quarter featured some important positives.
Mercury Systems is up 22.4% since the beginning of the year, and at $51.80 per share, it is trading close to its 52-week high of $53.87 from June 2025. Investors who bought $1,000 worth of Mercury Systems’s shares 5 years ago would now be looking at an investment worth $693.11.
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