Raymond James Upgrades iRobot, Sees Positive Catalysts Ahead

There are potential upside catalysts for iRobot Corporation’s IRBT stock and few negative catalysts that could push shares below the $45-$55 range, according to Raymond James.

The Analyst

Raymond James’ Brian Gesuale upgraded iRobot from Underperform to Market Perform.

The Thesis

Pricing may remain aggressive, new entrants may pose competition and there are concerns surrounding the robotic vacuum cleaner market “entering a commoditization phase,” Gesuale said in the note.

He added, however, that the Street estimates were already very low and that upside events “could jolt shares temporarily higher.”

The analyst raised the 2020 revenue estimate by $15 million to $1,285 million. He wrote, “We are assuming further price deterioration is more than offset by unit volumes.”

The earnings estimate was reduced, however, from $2.40 per share to $1.10 per share to reflect the absence of any tariff relief in 2020 and limited expense leverage.

Gesuale said he expects iRobot to report its results for the fourth quarter of 2019 ahead of consensus. He pointed out that the consensus estimates had been lowered some time back and that the company had achieved solid volumes and lower expenses.

Price Action

Shares of iRobotwere up 4.26% to $55.59 at time of publication.

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