A Market-Leading Robotics IoT Play: iRobot

• Shares of iRobot Corporation IRBT have appreciated 14.15 percent over the past six months, rising almost to their 52-week high on December 17 of $36.95
• Chardan Capital’s Marc Estigarribia has initiated coverage of the company with a Buy rating and price target of $42.
• Estigarribia believes that the company’s business model is well positioned to serve the connected/smart home segment, while also participating in other specialized IoT market verticals.

Analyst Marc Estigarribia mentioned that iRobot was a leader in the vacuum robot markets, with more than 65 percent share, following the success of its Roomba series.

“This company should be valued as a relatively high growth operator and a premium to the industry average is warranted, given its leading market position and value proposition offerings,” Estigarribia noted.

Related Link: iRobot To Sell Its Defense And Security Business To Arlington Capital For $45 Million

The company’s TAM is growing at a CAGR of 20 percent, while it is only 20 percent penetrated. It is estimated that the total connected home market could reach $200 billion by 2025, and iRobot is well positioned to benefit from the anticipated growth in the “Home Robots” segment.

According to the Chardan Capital report, “Better connected home eco-systems aided by cloud connectivity, mapping and navigation are expected to increase application of robotics based products in future.”

Given the success of the Roomba series, Estigarribia believes iRobot has great potential in entering newer consumer segments, such as lawn/outdoor and wet floor.

Geographical diversification could also be a significant driver, with China likely to be the company’s largest market in about five years with a potential revenue based of $1,100 to $1,700 million.