IRobot's earnings report indicated a "strong" performance in the U.S. and European market but was accompanied with a "disappointing" outlook in China, Burleson wrote in a research report. Specifically, revenue from the U.S. rose 34 percent year-over-year, revenue from EMEA rose 31 percent while revenue from Japan jumped 65 percent.
However, iRobot's global momentum is unlikely to continue moving forward as management's guide of 40-percent revenue growth in the U.S. (versus a prior 30-percent guide) is overshadowed by expectations in China. The company is now expecting a 25- to 30-percent decline in revenue in the country after previously estimating nominal growth.
Moreover, a lack of visibility into organic demand heading into 2018 and a growing competitive landscape creates uncertainty. In addition, the company will need to ramp spending to release new products, which is likely to limit leverage.
Finally, Burleson revised $65 price target now reflects a 21x multiple that is mostly in-line with the company's organic EPS growth expectations for next year.
Related Links:Worldwide Robotics Market to touch US$147.26 Billion by 2025 - Transparency Market Research
Munster: iRobot 'Sweeps Away Competitive Threats'
_____
Image Credit: Coolcaesar at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.