Kirby McInerney LLP Announces the Filing of a Securities Class Action on Behalf of Mercury Systems, Inc. (MRCY) Investors

The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the District of Massachusetts on behalf of those who acquired Mercury Systems, Inc. (“Mercury Systems” or the “Company”) (NASDAQ: MRCY) securities during the period from December 7, 2020 through June 23, 2023 (the “Class Period”). Investors have until February 12, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

On July 26, 2022, Glasshouse Research published a report detailing how its “analysis on [Mercury Systems] will reveal how management has used accounting gimmicks to obfuscate true economic earnings while concealing the decay of its core company.” Specifically, the report stated that the Company’s management has “prematurely recognized revenue on significant projects boosting both revenue and earnings unsustainably” while also using recent acquisitions to conceal true earnings “with material non-GAAP exclusions,” and that the Company’s free-cash-flow is “grossly overstated as the company has been stifling its vendors to conserve cash.” On this news, the price of Mercury Systems shares declined by $4.87 per share, or approximately 7.8%, from $62.13 per share to close at $57.26 on July 26, 2022.

On May 2, 2023, after the market closed, Mercury Systems announced weak third quarter 2023 earnings and lower margins, causing the Company to cut its full year 2023 guidance. On this news, the price of Mercury Systems shares declined by $7.84 per share, or approximately 17.3%, from $45.28 per share to close at $37.44 on May 3, 2023.

Then, on June 23, 2023, Mercury Systems announced that its Chief Executive Officer had abruptly resigned, and that the Company’s recent strategic review of acquisition alternatives had been unsuccessful. On this news, the price of Mercury Systems shares declined by $3.37 per share, or approximately 9.6%, from $34.87 per share to close at $31.50 on June 26, 2023.

The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) Mercury System’s serial acquiror strategy was not working and the company was using improper revenue recognition practices such as changing to long-term contracts to mask deteriorating organic growth; (ii) the acquisition of Physical Optics Corporation (“POC”) caused POC to lose its small business accreditation, which prevented POC from winning contracts that made up a large portion of its historical business; (iii) Mercury Systems had at least twenty programs that were suffering and not performing well; and (iv) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.

If you purchased or otherwise acquired Mercury Systems securities, have information, or would like to learn more about this investigation, please contact Thomas W. Elrod of Kirby McInerney LLP by email at investigations@kmllp.com, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.

Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website: https://www.kmllp.com.

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