Mercury Systems Inc. Looks Unlikely To Extend Its Recent Rally

MRCY: Mercury Systems logo
MRCY
Mercury Systems

Mercury Systems Inc. stock (NASDAQ: MRCY) is up 20% in just one month (21 trading days), outperforming the S&P 500 which was roughly unchanged over this period. If you look at the change over the last five and ten days, too, the stock has returned 7.8% and 5.6%, beating the market on both occasions. Mercury Systems reported mixed Q1 ’22 earnings in early November (MRCY’s fiscal year ends in June), with revenue rising from $206 million in Q1 ’21 to $225 million in Q1 ’22. However, with COGS and operating expenses rising faster than the rise in revenue, the company reported an operating loss of $5.6 million, versus a $18.8 million profit in Q1 ’21. This saw earnings-per-share (EPS) drop from $0.29 to -$0.13 over this period. However, in late December JANA Partners announced the acquisition of a 6.6% stake in Mercury Systems, and the major chunk of the stock’s rally has come since.

Now, is Mercury Systems stock set to continue its rally or could we expect a pullback? We believe that there is an average 42% chance of a rise in MRCY stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on MRCY Stock Chance of Rise. For additional details about MRCY historical returns and comparison to peers, see Mercury Systems (MRCY) Stock Return.

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Twenty-One Day: MRCY 20%, vs. S&P500 -0.4%; Outperformed market

(6% likelihood event; 42% probability of rise over next 21 days)

  • MRCY stock rose 20% the last twenty-one trading days (one month), compared to a broader market (S&P500) marginal drop of 0.4%
  • A change of 20% or more over twenty-one trading days is a 6% likelihood event, which has occurred 142 times out of 2515 in the last 10 years
  • Of these 142 instances, the stock has seen a positive movement over the next twenty-one trading days on 60 occasions
  • This points to a 42% probability for the stock rising over the next twenty-one trading days

Ten Day: MRCY 5.6%, vs. S&P500 -2.7%; Outperformed market

(21% likelihood event; 56% probability of rise over next 10 days)

  • MRCY stock rose 5.6% over the last ten trading days (two weeks), compared to a broader market (S&P500) drop of 2.7%
  • A change of 5.6% or more over ten trading days is a 21% likelihood event, which has occurred 523 times out of 2517 in the last 10 years
  • Of these 523 instances, the stock has seen a positive movement over the next ten trading days on 295 occasions
  • This points to a 56% probability for the stock rising over the next ten trading days

Five Day: MRCY 7.8%, vs. S&P500 -0.2%; Outperformed market

(6% likelihood event; 50% probability of rise over next five days)

  • MRCY stock rose 7.8% over a five-day trading period ending 1/14/2021, compared to the broader market (S&P500) which was roughly unchanged
  • A change of 7.8% or more over five trading days (one week) is a 6% likelihood event, which has occurred 160 times out of 2517 in the last ten years
  • Of these 160 instances, the stock has seen a positive movement over the next five trading days on 80 occasions
  • This points to a 50% probability for the stock rising over the next five trading days

 

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Jan 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MRCY Return 8% 8% 96%
 S&P 500 Return -4% -4% 105%
 Trefis MS Portfolio Return -7% -7% 264%

[1] Month-to-date and year-to-date as of 1/18/2022
[2] Cumulative total returns since the end of 2016

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