Market Overview

Roomba Maker iRobot No Longer A Buy After 2018 Rally, Tariff Worries, Piper Jaffray Says In Downgrade

Roomba Maker iRobot No Longer A Buy After 2018 Rally, Tariff Worries, Piper Jaffray Says In Downgrade

Shares of iRobot Corporation (NASDAQ: IRBT), the maker of the Roomba robot vacuum, remain well-positioned to dominate the sector, but the stock's "impressive move" higher in 2018 led Piper Jaffray to drop its bullish stance Monday. 

The Analyst

Piper Jaffray's Troy Jensen downgraded iRobot from Overweight to Neutral with an unchanged $90 price target.

The Thesis

The robotic vacuum market as a whole remains strong, and firsthand channel checks suggest demand for iRobot's devices was "solid" in the third quarter, Jensen said in the downgrade note. (See his track record here.) 

The company recently introduced new high-end vacuums, including the $950 i7+ with mapping capabilities, improved cleaning functionality and an integrated digital assistant. Demand in Europe likely notably outperformed expectations in the third quarter due to lower-priced products, the analyst said. 

Shares of iRobot are up nearly 30 percent since the start of 2018 and are now trading at nearly 2.9 times EV/sales, Jensen said. This marks a significant premium to the stock's historical average of 1.7 times EV/sales over an eight-year period and 1.9 times over a five-year period, he said.

The company's growth prospects and brand awareness are much stronger today than over the past few years, but at the same time the uptick in valuation now implies there is minimal room for incremental upside, the analyst said. 

Finally, iRobot could be impacted by tariffs since it uses Chinese manufacturers in its products, Jensen said. Given the high price tag on its products, a potential 25-percent increase in tariffs next year could mean slower growth if the cost is passed on to consumers or gross margins fall if the company absorbs some or all of the higher costs, he said. 

Price Action

Shares of iRobot were trading down 3.15 percent off the open Monday to $102.72.

Related Links:

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

Raymond James: iRobot Shares Reflect A More Balanced Risk-Reward Trade-Off

Photo courtesy of iRobot. 

Latest Ratings for IRBT

Jul 2019MaintainsHold
Mar 2019DowngradesBuyHold
Feb 2019DowngradesBuyNeutral

View More Analyst Ratings for IRBT
View the Latest Analyst Ratings

Posted-In: Piper Jaffray Robot Vacuum tariffs Troy JensenAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (IRBT)

View Comments and Join the Discussion!

Latest Ratings

CSTLInitiates Coverage On25.0
HESInitiates Coverage On93.0
OXYInitiates Coverage On61.0
COPInitiates Coverage On79.0
AMDInitiates Coverage On33.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

10 Biggest Price Target Changes For Monday

Benzinga's Top Upgrades, Downgrades For October 8, 2018