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Mercury Rides on Strong Portfolio & Expanding Clientele

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Mercury Systems (MRCY - Free Report) has been outperforming the industry in the past year on the back of its growing portfolio. The company has launched a number of new solutions that not only strengthened its market share but also expanded clientele.

Making full use of its technological knowhow and relationship with defense contractors, Mercury is forging ahead in the C4ISR (also referred to C4I) market. C4ISR refers to Communication, Command & Control, Computers, Intelligence, Surveillance & Reconnaissance, and EW.

Per Zion Market Research, the C4ISR market is expected to witness a CAGR of 3.6% during the period between 2018 and 2024 to hit $127.2 billion globally.

The company’s continued efforts and investments, which have resulted in successful completion of deals, have created about $800 million worth of potential C4I opportunity based on the estimated lifetime value of its top 30 programs.

Notably, Mercury’s shares have returned 39.3% against the industry’s decline of 1%.


Expanding Portfolio: Key Catalyst

Recently, the company announced that it will offer a hardened security solution jointly designed by Lockheed Martin (LMT - Free Report) and Intel (INTC - Free Report) .

The solution will be manufactured and tested in Mercury’s Defense Microelectronics Activity -accredited facilities. It will provide affordable, hardened, full stack security for defense and aerospace customers. In terms of performance, the solution is well suited for secure and rugged tactical edge computing.

The new solution, which is likely to hit the shelves around mid-2019, is expected to help Mercury expand its product portfolio and boost presence in two key areas — embedded computing systems market and C4ISR market.

Mercury has expertise in secure rackmount designing and custom embedded Intel solutions development of more than 30 years. Its embedded computing servers including the suite of EnsembleSeries blades have delivered processing solutions with long lifecycles, high performance, environmental resiliency, interoperability and SWaP optimization for 35 years.

Additionally, the company has been significantly investing in embedded computing technology over the past quarters.

It recently launched the EnsembleSeries HDS6605, a powerful, general-purpose processing 6U OpenVPX blade server, in a bid to boost its capabilities in embedded computing. This is also a step ahead in its efforts in electronic warfare and rugged defense. The blade servers, powered by Second Generation Intel Xeon Scalable processors, feature hardware-enabled support for artificial intelligence applications.

Further, Mercury also released board-to-board data transmission rates of 100 Gbps. Through this, it aims to enable faster next-generation PCIe Gen-4 Ethernet and InfiniBand high-speed switch fabrics. These fabric switches run within OpenVPX embedded computing subsystems.

Per Mordor Intelligence, the global embedded computing systems market is expected to witness a CAGR of 6.6% over the period of 2018 to 2023.  This presents significant growth opportunity for Mercury.

Zacks Rank & A Key Pick

Mercury currently carries a Zacks Rank #3 (Hold).

A top-ranked stock in the broader Computer & Technology sector is Cadence Design Systems, Inc. (CDNS - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Cadence is projected to be 12%.

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