Truist Securities raised its price objective for Mercury Systems (NASDAQ:MRCY) to $109.00 from $102.00 on Wednesday and kept a Buy rating on the defense technology company. The stock is trading at $80.35 and has returned 135.88% over the past year, according to InvestingPro data.
The analyst move follows Mercury’s fiscal second-quarter 2026 earnings, which beat consensus estimates on all major metrics. Notably, the company generated $99.38 million in levered free cash flow over the trailing twelve months, a performance Truist described as stronger than market expectations.
Mercury reported that domestic demand - which represents 84% of the firm’s revenue - rose 9% year-over-year. For the last twelve months the company posted total revenue of $942.54 million, representing 6.58% growth. Management provided directional guidance for the back half of fiscal 2026 that includes an anticipated year-over-year revenue decline in the third quarter and an expected free cash flow burn.
Management cited efforts to tighten working capital as a current priority, with specific focus on supply chain management, accelerating customer deliveries and implementing demand planning initiatives. Truist said it views management’s outlook as conservative and expects some revenue pull-forward to occur in the third quarter of fiscal 2026.
Mercury’s fiscal second-quarter results highlighted sequential and year-over-year improvements. The company reported quarterly revenues of $233 million, up 4.4% from the prior year and roughly 10.6% ahead of consensus expectations. Adjusted earnings per share were $0.16 - a 136% increase year-over-year and double the forecasted $0.08. Adjusted EBITDA came in at $30 million, a 36.3% increase from the year-ago quarter.
Following the strong quarter, Canaccord Genuity also raised its price target on Mercury to $102 from $88 while maintaining a Buy rating. The consecutive price target increases and the beat on both top- and bottom-line metrics reflect analysts’ responses to the company’s recent performance and cash generation.
While results were favorable, management’s guidance for the third quarter signals some near-term softness in revenue and free cash flow. The company intends to address working capital through supply chain and demand-planning initiatives aimed at accelerating deliveries and aligning inventories with customer demand.
Investors and sector observers will watch third-quarter execution closely to see whether the pull-forward of revenue that Truist expects materializes and how quickly working capital improvements translate into sustained cash flow generation.