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Although iRobot Corporation’s (NASDAQ:IRBT) first-quarter results are supported by recent data on strong sell-through for robot vacuums, this may not be indicative of an acceleration in the category, according to BofA Securities.
The iRobot Anlayst
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John Babcock downgraded iRobot from Neutral to Underperform with an unchanged $77 price target.
The iRobot Thesis
While iRobot’s stock rallied after the announcement of first-quarter results, there seems to be “more downside than upside risk to the shares,” Babcock said in a Friday downgrade note. (See his track record here.)
Recent data shows strong sell-through for iRobot’s products in April and May during the COVID-19 pandemic, the analyst said. The company raised its guidance for the second quarter, implying zero to 4% revenue growth.
The recent trends are not necessarily indicative of an acceleration in the robot vacuum category, and a re-rating of multiples is likely as growth rates normalize, he said.
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Near-term demand for these products will be driven by “the pace of the economic recovery and the evolution of consumer buying habits,” Babcock said.
The estimates assume iRobot will be successful in securing an extension of its Section 301 tariffs exemption, which expires in August, according to BofA.
IRBT Price Action
Shares of iRobot closed Friday's session slightly positive at $82.23.
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Photo courtesy of iRobot.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.