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Mercury Systems (MRCY) Secures $25M RF Subsystems Contract

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Mercury Systems (MRCY - Free Report) was recently awarded a $25-million contract by a leading defense prime contractor to support an electronic warfare application with its integrated high-performance radio frequency (“RF”) subsystems. The order is expected to be shipped over the next several quarters.

The continued flow of orders highlights Mercury’s commitment to developing compelling advanced RF conversion and digital signal processing technologies and making them more accessible to the defense industry.

Modernization in radar, EW and C4I is high, providing the company with new opportunities in weapon systems, space, avionics processing and mission computing and embedded rugged services.

Its embedded computing servers, including the suite of EnsembleSeries blades, have delivered processing solutions with long lifecycles, higher performance, environmental resiliency, interoperability and SWaP optimization for 35 years.

The company’s range of space-qualified RF and microwave solutions has been adopted in every successful mission to Mars.

MRCY works with many key defense prime contractors regularly, which ensures a healthy flow of orders. Its domain expertise in analog and digital integration has helped it build a solid business relationship with defense prime contractors for a long time. It is worth mentioning that defense prime contractors like Lockheed Martin (LMT - Free Report) and Raytheon comprised an aggregate of a significant 34% of the company’s revenues in fiscal 2021.

Last month, Mercury announced collaborating with Lockheed Martin to develop and manufacture new sensor processing technologies at its Geneva-based facility to address the mission-critical needs of the aerospace and defense industry.

Through this $40-million contract, Mercury and LMT together will deliver the world’s most-advanced airborne defense systems to Switzerland and other countries. This will enhance Swiss national security, expand job opportunities and ensure additional market access to local Swiss industries in the long run.

The agreement will boost MRCY’s international growth by strengthening its expertise in product development. The company will design, develop and manufacture embedded processing technology for applications like radar signal processing, multi-sensor data fusion, AI and situational awareness together with Lockheed Martin. This will not only ensure the highest performance and functionality level but also enable to reach the most-critical safety certification levels of DO-254 and DO-178C.

Zacks Rank & Stocks to Consider

Currently, Mercury carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector are ON Semiconductor (ON - Free Report) and Analog Devices (ADI - Free Report) . While ON currently sports a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ON's second-quarter 2022 earnings has been revised to $1.26 per share from $1.04 over the past 60 days. For 2022, earnings estimates have moved north by 18% to $4.91 per share in the past 60 days.

ON's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.8%. Shares of ON have rallied 65.7% in the past year.

The Zacks Consensus Estimate for Analog Devices' third-quarter fiscal 2022 earnings has been revised upward by 24 cents to $2.42 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 9.6% to $9.24 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of ADI have increased 0.4% in the past year.

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