Held
MRCY · Mercury Systems Inc
Last analysed ·
Against its published line
1 name has closed through its line on this close.
How to read this
The red mark is the published kill line — the price that would prove the pick wrong. The dot is where the name closed on 10 September 2026; a dot LEFT of the mark has closed through its line.
Distance is drawn on a square-root scale, so close calls get the room. Past 8% a row stops competing and reads well clear, with a hollow dot to say the figure is off the drawn scale. Rows run tightest first.
Resolved Graded and closed 2026-07-24 at medium conviction — the published kill line did not fire. Coverage continued after the close; the read below is dated 2026-09-10 and is not part of the scored record.
Current thesis
Defense-electronics turnaround still re-rating on record bookings and a promised FCF turn, but the stock has given back ~20% from its $128.45 ATH and now chops near the analyst median (~$103) into a binary ~Aug 10-18 Q4/full-year print. Consolidation, not acceleration — the move is maturing into the report.
Kill line
A weekly close below $94 loses the breakout base and rising 50-day shelf underpinning the advance. Secondary: a Q4 FY26 print (~2026-08-10 to 08-18) with free cash flow failing to turn positive or book-to-bill under 1.0, or defense-electronics flipping to saturated as KTOS/AVAV break their July lows.
Pick status
Played out resolved published kill line did not fire How this is scored →Latest analysis and events for MRCY —
As of 10 September 2026, the latest FrontierPicks analysis for Mercury Systems Inc (MRCY): Defense-electronics turnaround still re-rating on record bookings and a promised FCF turn, but the stock has given back ~20% from its $128.45 ATH and now chops near the analyst median (~$103) into a binary ~Aug 10-18 Q4/full-year print. Consolidation, not acceleration — the move is maturing into the report.
Kill line: A weekly close below $94 loses the breakout base and rising 50-day shelf underpinning the advance. Secondary: a Q4 FY26 print (~2026-08-10 to 08-18) with free cash flow failing to turn positive or book-to-bill under 1.0, or defense-electronics flipping to saturated as KTOS/AVAV break their July lows.
Most recent dated event on file: — catalyst 1d ago.
Current Thesis
Mercury Systems' order-backed recovery thesis requires a weekly close above $90.61 before a weekly close below $82.42; the September 9 daily close of $80.76 leaves that case under immediate structural pressure. Those are the recovery conditions published on 2026-09-08, and they remain unchanged. The latest daily observation is below the failure threshold, but it does not establish a weekly breach.
The original re-rating narrative is dead — the 2026-09-04 close of $82.42 had already broken its earlier $94 weekly condition. The narrower recovery thesis is an inference from the record orders reported on 2026-08-18, with no confirmed price reversal in the supplied September 9 observations. Mercury's retrieved investor-page snapshot still identifies the August 18 results as its latest release; it supplies no subsequent operating update. Mercury investor relations
Bullish and bearish views on Mercury Systems Inc
The model's bull view on Mercury Systems Inc (MRCY), in brief: Orders support the recovery argument. Mercury's 2026-08-18 results reported fiscal fourth-quarter bookings of $660 million, up 93.1% year over year, and a book-to-bill ratio of 2.28. Orders exceeded recognized revenue during the quarter. Company results Backlog provides an… The bear view: Annual cash generation weakened. Mercury's 2026-08-18 release reported fiscal 2026 free cash flow of $68 million against $119 million in fiscal 2025. Free cash flow measures operating cash flow less capital expenditure; the order record has not produced stronger annual cash… Both cases follow in full.
Bull Case
- Orders support the recovery argument. Mercury's 2026-08-18 results reported fiscal fourth-quarter bookings of $660 million, up 93.1% year over year, and a book-to-bill ratio of 2.28. Orders exceeded recognized revenue during the quarter. Company results
- Backlog provides an execution test. The same release reported backlog above $1.9 billion at 2026-07-03. That establishes booked demand; subsequent revenue and cash generation determine whether the operating recovery materializes. Company results
- Analyst expectations remain supportive. Stock Analysis records J.P. Morgan analyst Seth Seifman's price-target increase to $110 from $101 on 2026-09-02, with his Hold rating unchanged. This is a third-party forecast, not confirmation of the published recovery condition. Analyst-action table
Bear Case
- Annual cash generation weakened. Mercury's 2026-08-18 release reported fiscal 2026 free cash flow of $68 million against $119 million in fiscal 2025. Free cash flow measures operating cash flow less capital expenditure; the order record has not produced stronger annual cash generation. Company results
- Quarterly earnings moved backward. Fourth-quarter diluted earnings under generally accepted accounting principles fell to $0.01 per share from $0.27 a year earlier in the 2026-08-18 results. The booking increase therefore coexisted with weaker reported earnings. Company results
Setup & Price Structure
The supplied adjusted daily series records a 2026-09-09 close of $80.76, a three-month price decline of 24.4%, and a 14-day relative strength index (RSI) of 18.3. The shares stood 36.0% below the series' 52-week high of $126.21. These are measured observations; the low RSI alone does not establish a reversal.
The $90.61 recovery hurdle is the fixed level published on 2026-09-08, originally drawn from Stock Analysis's September 4 snapshot of the 200-day moving average. It is not presented as the current moving average. The $82.42 failure threshold is the September 4 reference close used in that same published recovery framework.
Stock Analysis's 2026-09-04 snapshot reported short interest of 4.98 million shares, representing 8.97% of float and 8.63 days of average trading volume. Those historical observations cannot establish whether short sellers increased exposure during the September 9 decline. The evidence supports a low-conviction recovery case: the latest daily close is already below its weekly failure threshold.
Catalyst Calendar (next 30 days)
- 2026-09-24 — Short-interest publication. FINRA schedules publication for the 2026-09-15 settlement date, providing a later observation of reported short exposure. FINRA schedule
- 2026-10-09 — Short-interest publication. FINRA schedules publication for the 2026-09-30 settlement date. This updates positioning evidence without measuring backlog conversion or cash generation. FINRA schedule
The investor-page snapshot retrieved on 2026-09-10 features the completed 2026-08-18 earnings call and supplies no next earnings date. An unconfirmed reporting date does not resolve the operating thesis. Mercury investor relations
Elapsed catalysts
- 2026-09-10 — Short-interest publication. FINRA schedules publication for the 2026-08-31 settlement date. A new Mercury figure is not established here, so no increase or decrease is asserted. FINRA schedule (passed 1d ago)
What Would Change Our Mind
Loss of the published recovery floor would end this narrower case: a weekly close below $82.42 is the thesis-break condition. The September 9 daily close of $80.76 has crossed that price intrawEEK, so weekly confirmation remains the unresolved observation. A weekly close above $90.61 before that failure condition would satisfy the published price-recovery case; it would not by itself establish improved cash conversion.
Correlation Notes
This remains a single-name turnaround assessment. The supplied September 9 evidence contains no matched peer-return series, so it supports no measured claim about correlation with defense stocks or interest rates. The operating link to defense demand is supported by Mercury's 2026-08-18 order report, but that evidence does not establish a group-driven recovery. Company results
Notes
- Fiscal year ends in early July (FY26 ended 2026-07-03); the August 2026 report covered the June quarter and the full year together.
- FY26 GAAP net loss $29.7M, -$0.50 per diluted share, against adjusted EPS $1.06 — trailing-earnings screens read as undefined.
- Two consensus panels disagree: $115.78 across 10 analysts on stockanalysis.com versus $103.75 across a nine-analyst S&P Global panel, both retrieved 2026-09-04.
- Momentum readings diverge by vendor: RSI(14) 12.0 on the adjusted daily series versus 32.54 on stockanalysis.com, both against the 2026-09-04 close.
- Customer concentration per the FY26 10-K: RTX 15%, Lockheed Martin 11%, Northrop Grumman 10% of FY26 revenue; roughly 97% of revenue is US and allied defense.
- A law-firm fiduciary-duty solicitation circulated around 2026-08-26 is an investigation notice, separate from the $32.5M securities class action already settled.
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