Canaccord analyst Robert Burleson believes 2018 will be the year of iRobot Corporation (NASDAQ:IRBT) as home robots begin to capture market share and investor attention. As such, even though shares dropped almost 13% yesterday, the analyst outlines a bullish forecast and reiterates a Buy rating on IRBT with a price target of $68, which represents a 21% increase from where the shares last closed. Perhaps investors have become less wary, as shares have recovered 6% of lost ground in trading today.
For the fourth quarter, Burleson believes IRBT posted “strong” results for a solid 2016 performance, with a guidance beat on back of last quarter’s raise, thanks to a domestic 35% year-over-year rise in consumer growth in the last year. From the analyst’s eyes, this reveals “[…] a clear positive inflection for the robotic vacuum cleaner category and Roomba’s dominance.” For the first quarter of 2017, the analyst has lifted his projection from $141 million to $148.1 million, for 2017 from $749.4 million down to $775.0 million, and for 2018 from $859.9 million up to $921.2 million. The analyst tweaks his EPS estimates mostly upwards as well, lifting EPS for the first quarter of 2017 from $0.20 to $0.21, for 2017 cutting from $1.71 to $1.52, and for 2018 raising from $2.44 to $2.50. Burleson’s EBITDA outlook also sees a boost, with his forecast for the first quarter of 2017 going from $15.8 million to $16.3 million. Though EBITDA in 2017 is reigned in from $104.7 million to $93.7 million, Burleson continues to believe 2018 will be a stellar one for the firm, upgrading expectations from $136.1 million to $140.4 million.
Yet, how does the analyst justify his confidence considering the decline IRBT shares experienced yesterday? The analyst explains, “Stock down on international weakness: With soft Q4 results for international, including 11/11 China sales that were below management’s expectations, investors are likely to be skeptical regarding positive guidance for international in 2017.”
Overall, “We are increasing our 2018 estimates on an outlook for growth acceleration for home robots. While the market is likely to take a wait and see approach given soft international in Q4 and a strong recovery requisite to meet guidance, we are believers in broader adoption for the category, and see greater penetration with stable share as a reasonable scenario considering close association with other leading smart home devices and a lack of real competition,” Burleson concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Robert Burleson is ranked #204 out of 4,395 analysts. Burleson has a 57% success rate and garners 10.4% in his yearly returns. When recommending IRBT, Burleson gains 40.4% in average profits on the stock.
TipRanks analytics indicate IRBT as a Buy. Based on 6 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on iRobot stock, 2 maintain a Hold, while 1 issues a Sell. The 12-month average price target stands at $60.25, marking a 13% upside from where the stock is currently trading.