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R O B O

ANALYSIS OF A CONTRARIAN TAKE ON iROBOT CORP., A FAVORITE CONSUMER ROBOTICS COMPANY OF WALL STREET AND RETAIL INVESTORS

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Downside Roomba

I C S & A

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fter the 2005 iRobot Corp. (IRBT) initial public offering priced at $24, the stock was range bound for 10 years until rocketing from the mid-30s at the beginning of 2016 to topping $120 recently. Highgrowth expectations for the consumer robotics sector continue, and iRobot expects 2019 revenue of between $1.28 billion and $1.31 billion (year-over-year growth of 17% to 20%), operating income of $108 million to $118 million, and earnings per share of $3 to $3.25, excluding discrete items. Wall Street is generally neutral-to-positive on iRobot stock. Three major banks have issued strong buy ratings, and it’s not a surprise that no investment banks have issued a sell rating on the company. But, the robo-analysts at New Constructs have a different view.

iRobot, founded in 1990 by Massachusetts Institute of Technology roboticists that included Rodney Brooks (see p. 17), began with the vision of making practical robots a reality. By now, the company has sold more than 25 million robots worldwide. The company inspired the first micro rovers used by NASA, changing space travel forever, and it deployed the first ground robots used by U.S. Forces in conflict. It brought the first selfnavigating FDA-approved remote-presence robots to hospitals and introduced the first practical home robot with Roomba, forging a path for an entirely new category in home cleaning. With more than 25 years in the robot industry, iRobot remains committed to building robots that provide people with smarter ways to clean and accomplish more in their daily lives. —iRobot Corp. company website

IRBT iRobot earns an unattractive rating, say the New Constructs analysts, which means the stock has more downside risk than upside potential.

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June 2019  

If there is a single sector that investors need to understand to navigate opportunities in the years to come, its Robotics, Automation and A...

June 2019  

If there is a single sector that investors need to understand to navigate opportunities in the years to come, its Robotics, Automation and A...

Profile for luckbox