Executive Mosaic’s GovCon Index recorded gains in four of five trading sessions, advanced more than 1% in three days, and had its best day Wednesday with +1.99%. Friday’s closing of $5,640.35 was also its highest close. The result is a 4.9% weekly gain, GCI’s highest this year.
The index, which tracks the stock performances of 30 major government contractors, is now up 20.82% year-to-date following its best weekly performance. Wall Street’s top benchmarks had solid weekly gains, too, led by +5.7% of the tech-heavy Nasdaq Composite. The Dow Jones Industrial Average (+4.6%) and S&P 500 (+4.7%) rose nearly 5% for the week.
Standout GovCon Index performers
Palantir Technologies (NYSE: PLTR) and Mercury Systems (Nasdaq: MRCY) were the week’s standout performers. The former rose 39.29% in five trading days, while the latter gained 28.69% in the same period. Their stock prices soared by an identical +23.5% on Tuesday and Wednesday, respectively. Also, in mid-week, V2X (NYSE: VVX) and Carlyle Group (Nasdaq: CG) popped more than 9%. Kratos Defense & Security Solutions (Nasdaq: KTOS) advanced 13.55% during the week following its 9.03% jump Friday.
Analytics software provider Palantir Technologies beat analysts’ earnings estimates in Q3 2024 and raised its full-year financial guidance. In the three months ending Sept. 30, 2024, revenue and net income increased 30% and 50.2% year-over-year to $725.5 million and $143.5 million.
During Monday’s earnings call, Alex Karp, co-founder and CEO of Palantir, said the unrelenting AI demand won’t slow down. “The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers,” he added.
Aerospace and defense company Mercury Systems also beat top-line expectations for Q1 fiscal 2025. In the three months ending Sept. 27, 2024, sales climbed 11% to $204.4 million from a year ago, while the $17.52 million net loss was a 109.5% improvement from Q1 fiscal 2024. Bill Ballhaus, chairman and CEO of Mercury Systems, said, “I am optimistic about our strategic positioning and expectations to deliver predictable organic growth with expanding margins and robust free cash flow.”
Industry changes coming
Tuesday’s 60th quadrennial US presidential election and the Federal Reserve’s rate action Thursday were major tailwinds for the equities market. Donald Trump won, and Kamala Harris conceded, while the central bank lowered its benchmark rate for the second time in 2024.
According to a GovCIO Media and Research article published on Nov. 4, 2024, the federal acquisition landscape will change once a new administration assumes office. It added that contractors and their federal customers should anticipate these changes and their impact on the federal contracting business.
