Mercury Systems, Inc. (NASDAQ:MRCY) Just Released Its Third-Quarter Results And Analysts Are Updating Their Estimates

Mercury Systems, Inc. (NASDAQ:MRCY) just released its latest quarterly report and things are not looking great. Revenues missed expectations somewhat, coming in at US$208m, but statutory earnings fell catastrophically short, with a loss of US$0.77 some 97% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Mercury Systems

After the latest results, the nine analysts covering Mercury Systems are now predicting revenues of US$875.5m in 2025. If met, this would reflect a modest 4.2% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 63% to US$0.83. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$875.5m and losses of US$0.78 per share in 2025. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.

The consensus price target held steady at US$25.50, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Mercury Systems at US$33.00 per share, while the most bearish prices it at US$20.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Mercury Systems' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.4% growth on an annualised basis. This is compared to a historical growth rate of 7.0% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.3% annually. Even after the forecast slowdown in growth, it seems obvious that Mercury Systems is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Mercury Systems. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$25.50, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mercury Systems going out to 2026, and you can see them free on our platform here..

It might also be worth considering whether Mercury Systems' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.