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  "documentTitle": "Mercury Systems Inc. (MRCY)",
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  "authorName": "Mercury Systems Inc.",
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      "text": "Taking these issues into consideration, and discounting Mercury's multiple to the industry average, we estimate 50%-60% downside.",
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      "text": "Based on our research, Mercury appears ill-prepared to address these new requirements given its relative shortage of cybersecurity personnel, and the fact that both its long-time CIO and long-time CISO recently departed in August 2018.",
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      "text": "Mercury currently has the highest valuation in the Aerospace & Defense industry despite posting the sector’s weakest cash flow as a percentage of revenue and average organic revenue growth.",
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      "text": "Sell-side analyst see just 9.5% upside in its share price, but haven’t factored in complications arising from its Supermicro relationship and rising cyber compliance costs.",
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      "text": "Taking these issues into consideration, and discounting Mercury’s multiple to the industry average, we estimate 50%-60% downside.",
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      "text": "Mercury has quietly hinted at some of these concerns through subtle changes to its 10-K risk factors and safe harbor provisions, and through recent job postings in supply chain procurement and quality control.",
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      "text": "Mercury’s gross margins have now fallen below its “low target” of 45%, and could compress further due to Defense Federal Acquisition Regulations Supplement (DFARS) compliance issues and potential product recall costs from the Supermicro fallout.",
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      "text": "On October 8th, Mercury introduced “50 Models To Its Rugged Server Product Line”- could this be a tacit admission of problems?",
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      "text": "Additionally, Mercury recently amended its credit agreement for a third time in late September 2018, but never disclosed that it had amended the agreement previously in December 2017, just as it began factoring accounts receivable. Factoring accounted for a substantial 43% of FY18 operating cash flow.",
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      "text": "In our first report, we highlighted Mercury’s risk of losing its small business status for government contracts. Mercury lost this status earlier this year, which has coincided with rising inventories relative to backlog convertible to revenues in the next 12 months.",
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