Aerospace and defense specialist Mercury Systems (NASDAQ:MRCY) — which offers advanced components, circuits, semiconductors and modules, among many other product categories — saw its shares skyrocket over 20% on Wednesday. Encouraging results tied to its fiscal fourth-quarter earnings disclosure are catapulting sentiment. Additionally, MRCY stock has benefited from surging relevancies in unmanned systems, one of Mercury’s specialties.
Earlier today, Mercury posted a net loss of $10.8 million or 19 cents a share. That was an unfavorable expansion of red ink from the year-ago quarter’s result of a loss of $8.2 million or 15 cents per share. However, Zacks reported that on a non-GAAP basis (adjusted for non-recurring items), the defense specialist posted earnings per share of 23 cents. This figure easily beat the expected loss of 7 cents adjusted.
On the revenue front, Mercury generated $248.6 million, a 1.8% decline from the year-ago quarter. However, the latest result easily beat the consensus estimate by a staggering 11.7%, explaining the enthusiasm for MRCY stock.
As Zacks explained, “[t]he results reflected solid progress in each of the priority focus areas, with highlights that include retiring risk across remaining challenged programs and returning to pilot production on the common processing architecture area.”
Relevant Fundamentals Bolster the Narrative for MRCY Stock
Another catalyst — this time, centering on a long-term framework — is the geopolitical focus on unmanned aerial vehicles (UAVs). A core specialty under Mercury, the contractor provides what it terms a “holistic approach” to delivering the best unmanned systems. In particular, the company offers automation and digitalization-focused software and cybersecurity solutions.
Drones have become a game-changer in military operations. Throughout Russia’s ongoing invasion of Ukraine, unmanned systems have represented a key piece of technology. The uses have ranged from reconnaissance to intelligence gathering to attacks on enemy personnel and vehicles. From a cynical standpoint, MRCY stock can then be included in the broader discussion.
On a more positive note, Mercury is also a specialist in developing the technologies needed to foster urban air mobility solutions. Companies such as Archer Aviation (NYSE:ACHR) are rapidly making progress in this field, offering potential opportunities for MRCY stock.
In addition, Mercury is also focused on medical drone deliveries. Per the company’s website, it features an extensive European network that allows Mercury to assist healthcare providers with their drone-related needs.
However, one risk is that, according to TipRanks, MRCY stock suffers from a moderate sell consensus view. Even more glaring, no analyst has issued a buy rating. Therefore, investors will want to exercise caution.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
