DiCello Levitt LLP Announces Investor Class Action Lawsuit Filed Against Mercury Systems, Inc. (NASDAQ: MRCY) and Lead Plaintiff Deadline
SAN DIEGO, Dec. 20, 2023 /PRNewswire/ -- DiCello Levitt LLP announces that purchasers or acquirers of Mercury Systems, Inc. ("Mercury" or the "Company" – NASDAQ: MRCY) common stock between December 7, 2020 and June 23, 2023, inclusive (the "Class Period") have until February 12, 2024 to seek appointment as lead plaintiff of the Mercury class action lawsuit. The lawsuit charges Mercury and certain of its former senior executive officers with violations of the Securities Exchange Act of 1934.
If you purchased shares of Mercury securities between December 7, 2020 and June 23, 2023, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, you may submit your information here: https://dicellolevitt.com/securities/mercury-systems/. You can also contact DiCello Levitt partner Brian O'Mara by calling (888) 287-9005 or at investors@dicellolevitt.com.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor's ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
Allegations
Mercury is a technology company that produces component modules and subsystems for the defense and aerospace industries. According to the lawsuit, during the Class Period, Mercury misled investors and failed to disclose that Mercury's serial-acquirer 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. The lawsuit also alleges that Mercury failed to disclose that its acquisition of Physical Optics Corp. ("POC") would cause POC to lose its small business accreditation and prevent POC from winning contracts that made up a large portion of its historical business. Defendants further failed to disclose that Mercury's 1MPACT initiative to increase margins was not working and was eroding margins.
The lawsuit alleges that a July 26, 2022 short seller report issued by Glasshouse Research revealed that: (i) Mercury had overstated organic growth; (ii) the POC acquisition had been a "disaster" which was utilized to obscure Mercury's financial results; (iii) 1MPACT was a failure; and (iv) Mercury's management prematurely recognized revenue on significant projects to artificially boost both revenue and earnings unsustainably which also caused the Company's working capital and unbilled receivables to swell far beyond industry norms. The Glasshouse Report attributed this premature revenue recognition to Mercury's executives, noting that management "juice[d] the numbers in their favor" to meet revenue and adjusted EBITDA targets, on which the executives' compensation was based. On this news, the Company's share price fell $4.87 per share, from $62.13 per share on July 25, 2022, to $57.26 per share on July 26, 2022.
Then, on May 2, 2023, Mercury announced poor third quarter of 2023 earnings and lower margins that caused the Company to slash its full year 2023 guidance. Mercury also disclosed that approximately a dozen of its 300-plus active programs had been negatively affected by higher costs related to supply chain and labor inefficiencies, manufacturing constraints, and inflation. Mercury continued to downplay the significance of these issues, however, claiming that these "challenges" were "not unique to Mercury" and that "structurally, our business model and financial outlook are sound." On this news, the price of the Company's common stock declined $7.84 per share, or 17.3%, to close at $37.44 per share on May 3, 2023.
Then, on June 23, 2023, Mercury announced that its Chief Executive Officer had abruptly resigned, and that the Company's recent strategic review of acquisition alternatives did not result in the sale of the Company. On this news, Mercury's share price declined an additional $3.37 per share, or 9.6%, to close at $31.50 per share on June 26, 2023, erasing billions in market capitalization.
About DiCello Levitt
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