Quality metrics fall below the minimum acceptable threshold and the risk/reward geometry turns unfavorable at current prices, while near-total dependence on government customers amplifies program risk; only four consecutive earnings beats—with an average positive surprise near 186%—offer a counterweight to an otherwise challenged setup.
Thesis pillars
- Unattractive Reward Risk Geometry→Stable
- Government Customer Concentration Fragility↓Deteriorating
- Quality Below Minimum Threshold↓Deteriorating
- +1 more pillar — see the Why tab for full reasoning
Pillars as of Jul 3, 2026, based on the 10-K filed Aug 18, 2026· older than 90 days
Mercury Systems Inc (MRCY) Stock Analysis
Recovery setup
Industrials · Aerospace & Defense
Sell if holding. Engine safety override at $80.32: a dimension score below its floor triggers a hard block regardless of the otherwise-positive setup — overall score 4.5/10 and A.R:R 1.7:1 is above the 1.5:1 BUY gate. Specifically: High short interest: 11%; Elevated put/call ratio: 2.45; Below-average business quality.
Mercury Systems makes secure signal and data processing components, modules, subsystems and integrated solutions for aerospace and defense, including sensor and radar processing, electronic warfare, avionics and C4I applications. It sells mainly as a subcontractor to defense... Read more
Sell if holding. Engine safety override at $80.32: a dimension score below its floor triggers a hard block regardless of the otherwise-positive setup — overall score 4.5/10 and A.R:R 1.7:1 is above the 1.5:1 BUY gate. Specifically: High short interest: 11%; Elevated put/call ratio: 2.45; Below-average business quality. Chart setup: Death cross but MACD improving, RSI 59. Score 4.5/10, moderate confidence.
Passes 6/9 gates (positive momentum, favorable risk/reward ratio, no SEC red flags, news events none recent, semi cycle peak clear, materials cycle peak clear). Fails on clean insider activity and earnings proximity 6d<=7d. Suitability: aggressive.
About Mercury Systems Inc
About Mercury Systems Inc
U.S. and foreign government sales, mostly through defense prime contractors, made up approximately 97% of Mercury Systems' fiscal 2025 net revenues, with RTX at 13% and both Lockheed Martin and the U.S. Navy at 10%. Fiscal 2025 revenue reached $912.0 million, versus $835.3 million a year earlier, and products are deployed in more than 300 programs across 35 countries.
Mercury sells components, modules and subassemblies, and integrated subsystems for sensor and radar processing, electronic warfare, avionics, weapons and command, control, communications and intelligence systems. The company runs a product model, where internal research and development builds capabilities for many customers, and a solutions model, where customers fund a development phase before a production phase that can last many years. Four business units split the work: Signal Technologies, Processing Technologies, Integrated Processing Solutions and an international unit with sites in the U.K., Spain and Switzerland. Hardware draws on Altera and AMD FPGAs, NVIDIA GPUs and Intel server-class processors, and contract manufacturers build certain sub-assemblies; the Swiss manufacturing operation was outsourced to Cicor Group in fiscal 2025. Fixed-price engagements represent a substantial percentage of the business, while development contracts carry lower gross margins than standard products.
Show full overview
Supply chain concentration and program execution frame the main exposure. The 10-K says several components, including FPGAs, ASICs, processors, memory and specialty glass, come from sole-source or a limited number of suppliers, which may end contracts on 30 days' notice and stop offering products on 180 days' notice. In fiscal 2024 the company halted production for months on multiple secure computing programs, and it cites the F-35, F/A-18, KC-46, LTAMDS, SCAR and THAAD programs as potentially large future revenue sources whose loss or cancellation could weigh on results. A 10% baseline tariff on imports may also pressure gross margins if costs cannot be recovered.
See also: Industrials · Aerospace & Defense
From Mercury Systems Inc's most recent 10-K filing, extracted October 18, 2026.
Recent developments
updated Oct 28, 2026Recent Developments — Mercury Systems Inc
Latest news
- NEWS RBC Capital Maintains Outperform on Mercury System, Lowers Price Target to $105 — benzinga Oct 28, 2026 positive
- NEWS RBC Cuts Price Target on Mercury Systems to $105 From $120 — fiscal.ai Oct 28, 2026 negative
- NEWS Piper Sandler Maintains Overweight on Mercury System, Lowers Price Target to $107 — benzinga Oct 23, 2026 neutral
- NEWS Oppenheimer Initiates Coverage On Mercury System with Outperform Rating, Announces Price Target of $90 — benzinga Oct 22, 2026 positive
- NEWS Oppenheimer Initiates Coverage of Mercury Systems with Outperform Rating — fiscal.ai Oct 22, 2026 positive
Latest item Oct 28, 2026 · Generated 2026-11-04T12:10:03Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- HIGHCustomerU.S. government and foreign governments97%10-K Item 1A: 'to the U.S. government, as well as foreign governments, accounted for approximately 97%, 97% and 95% of our total net revenues'
- LOWCustomerRTX Corporation15%10-K Item 1A: 'In fiscal 2026, RTX Corporation accounted for 15% of our total net revenues'
- LOWCustomerLockheed Martin11%10-K Item 1A: 'Lockheed Martin accounted for 11% of our total net revenues'
- LOWCustomerNorthrop Grumman10%10-K Item 1A: 'Northrop Grumman accounted for 10% of our total net revenues'
- HIGHSuppliersole-source suppliers10-K Item 1A: 'Several components used in our products are currently obtained from sole-source suppliers.'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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Rating Breakdown
4 floor-breakers
Growth below the gate floor. Component breakdown shows what dragged the score down.static
Unprofitable operations — net margin -3.0%. Quality floor flags this regardless of sector context.static
Technicals below the gate floor. Component breakdown shows what dragged the score down.static
Ranks in the bottom of its industry peers on the composite signal. Better names in the same sector exist.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. Engine safety override at $80.32: a dimension score below its floor triggers a hard block regardless of the otherwise-positive setup — overall score 4.5/10 and A.R:R 1.7:1 is above the 1.5:1 BUY gate. Specifically: High short interest: 11%; Elevated put/call ratio: 2.45; Below-average business quality. Chart setup: Death cross but MACD improving, RSI 59. Prior stop was $74.70. Score 4.5/10, moderate confidence.
Analyst target: $94.83 (+18.1% upside). Prior stop was $74.70. Stop-loss: $74.70.
Concentration risk — Customer: U.S. government and foreign governments (97.0%); Concentration risk — Supplier: sole-source suppliers; Quality below floor (2.9 < 4.0).
Mercury Systems Inc trades at a P/E of N/A (forward 36.0). TrendMatrix value score: 6.9/10. Verdict: Sell.
19 analysts rate MRCY, with a consensus score of 4.2/5. 11 analysts publish price targets averaging $109.
What does Mercury Systems Inc do?Mercury Systems makes secure signal and data processing components, modules, subsystems and integrated solutions for...
Mercury Systems makes secure signal and data processing components, modules, subsystems and integrated solutions for aerospace and defense, including sensor and radar processing, electronic warfare, avionics and C4I applications. It sells mainly as a subcontractor to defense primes and reported fiscal 2026 revenue of $983.6 million. Sales to governments and defense primes were about 97% of revenue, and RTX, Lockheed Martin and Northrop Grumman each exceeded 10%.