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Mercury Systems has been upgraded to Strong Buy from Outperform at Raymond James with a price target of $80, up from $55. The firm cites the company's potential to drive EBITDA margin growth of 70% over the next two years and increasing revenue visibility due to strong backlog strength. The analyst notes that Mercury's multiple expansion has lagged peers.

Mercury Systems (MRCY) has been upgraded to a "Strong Buy" rating by Raymond James, with a new price target of $80, up from $55. The brokerage firm cited the company's potential to drive EBITDA margin growth of 70% over the next two years and increasing revenue visibility due to a robust backlog strength [2].

Mercury Systems, a provider of secure computing systems for weapons platforms, reported strong quarterly results, including earnings that more than doubled to $0.47 per share, beating analyst expectations [1]. The company's revenue climbed nearly 10% to $273.1 million, with adjusted EBITDA reaching $51.3 million, a 50% increase over projections [3]. The backlog grew by 6% to $1.4 billion, signaling strong demand for its solutions.

Raymond James noted that Mercury Systems' multiple expansion has lagged peers, trading about 10 times below the 2026 earnings multiples of its peers, despite above-average growth and improving free cash flow [2]. The firm forecast revenue of $1.07 billion in fiscal 2027, up 13.6% organically, and adjusted EBITDA margins of 18.8% [2].

The upgrade reflects growing global investment in air defense, radar, electronic warfare, and space systems, areas where Mercury Systems is "platform agnostic," allowing it to supply multiple prime contractors [2]. The company is expected to benefit from defense spending increases in major markets, including Israel's Iron Dome missile defense system and higher NATO spending.

References:

[1] https://www.investors.com/news/mercury-systems-earnings-q4-2025-mrcy-stock-upgrade/
[2] https://www.investing.com/news/stock-market-news/raymond-james-lifts-mercury-systems-on-defense-spending-tailwinds-4185666
[3] https://finimize.com/content/mercury-systems-outpaces-expectations-with-strong-bookings-and-growth