What Analysts Are Saying About Amazon's $1.7B iRobot Acquisition Deal

Zinger Key Points
  • The deal is likely to attract "a fair amount of scrutiny from regulators," one analyst says.
  • iRobot’s business has “slowed significantly,” another analyst noted.
What Analysts Are Saying About Amazon's $1.7B iRobot Acquisition Deal

Amazon.com, Inc. AMZN Friday announced plans to acquire iRobot Corporation IRBT in an all-cash deal valued at $1.7 billion.

Needham On Amazon’s iRobot Deal

Analyst James Ricchiuti, who has a Hold rating for iRobot, said in a note that the acquisition is “a natural extension” of Amazon’s home automation device strategy. “We think it is unlikely that other suitors will emerge” and the deal is likely to go through, Ricchiuti stated.

He added, however, that the deal “is likely to get a fair amount of scrutiny from regulators, given the current negative view of Big Tech in Washington and Europe.”

While iRobot is a clear leader in robotic vacuum cleaners (RVC), the market “still represents a relatively small share of the broader vacuum cleaner market,” and in recent years iRobot has lost share to low-price competitors, the analyst further said.

Check out other analyst stock ratings.

Telsey Group On Amazon’s iRobot Deal

Analyst Joseph Feldman maintained an Outperform rating and a price target of $150 for Amazon.

iRobot’s business “slowed significantly” in the latest quarter, with sales contracting by 30.2% and the company reporting a loss of $38 million, versus EBITDA of $17 million a year ago, Feldman said in a note.

“While iRobot needs operational support and looks to be facing supply chain and other headwinds to earnings in the near term, Amazon is adding a strong brand in consumer robots that already has devices in homes across the world,” the analyst wrote.

“In our view, Amazon is likely to leverage iRobot’s robotic technology and data platform to innovate and expand new smart home products as well as actively sell these smart everyday products to its 200MM+ global Prime members,” he further mentioned.

AMZN, IRBT Price Action: Amazon’s stock had risen by 1.01% to $139.38, while shares of iRobot had declined by 0.32% to $59.35 at the time of publication Monday.

Posted In: James RicchiutiJoseph FeldmanNeedhamTelsey GroupAnalyst ColorReiterationSmall CapAnalyst Ratings