Can Amazon Sweep Away iRobot's Dominant Positioning With Its Own Home Robots?

Amazon.com, Inc. AMZN reportedly wishes to expand from being a distributor and plunge into manufacturing home robots, according to Bloomberg. 

The story could present a concern for iRobot Corporation IRBT, which produces the Roomba vacuuming robots and Braava mopping robots, given Amazon's disruptive potential in the markets it enters. 

Loup Ventures' Gene Munster issued a bullish preview of iRobot's first-quarter results, which are due after the close Tuesday. 

Bloomberg: Prototype Underway, Testing Later This Year

A domestic robot codenamed "Vesta" — after the Roman goddess of hearth, home and family — is being secretly developed under Gregg Zehr, who runs Amazon's Lab126 hardware research and development arm, according to Bloomberg. 

Amazon has been hiring "aggressively" for the project, according to Bloomberg, which reviewed dozens of job listings posted by Lab126.

A Multibillion Opportunity For Amazon? 

The consumer robot market is estimated to be worth about $15 billion a year by 2023, according to Bloomberg, which citedfrom Research and Markets. This is nearly a threefold increase from $5.4 billion in 2018.

It's no wonder that others such as Sony Corp (ADR) SNE and LG Electronics are also eager to stake their claim to the robot market. 

While iRobot is the market leader, its robots can only vacuum and mop.

Amazon's product can reportedly navigate through homes like a self-driving car and  could resemble a mobile Alexa.

See also: Loup Ventures On iRobot: 'Expect Multiple Beat And Raise Quarters'

Munster: iRobot Likely to Announce Another Strong Quarter

The Roomba and Braava robots likely saw strong demand in the March quarter, Munster said in a Monday note. Accordingly, the analyst expects higher-than-expected sales volume.

"In addition, we believe the domestic robot market is one of the fastest growing robotic segments, and given iRobot's positioning and premium tech, we expect the company to sustain 20-percent-plus revenue growth for the next several years," Munster said.

Munster also dismissed fears of competitive pressure and said he sees iRobot flourishing for years to come.

Tracking iRobot pricing across the four largest distributors — Best Buy Co Inc BBY, Amazon, Bed Bath & Beyond Inc. BBBY and Target Corporation TGT — Loup Ventures said the company had, on average, higher pricing across all products in the March quarter relative to the December 2017 quarter.

The company has beaten top- and bottom-line expectations over the last year, Munster said. 

"Given management ability to manage expectations, we are optimistic about the upcoming quarter." 

Shares of iRobot were up 0.22 percent at $60.08 at the time of publication Tuesday. 

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Photo courtesy of iRobot.