Loup Ventures Calls for iRobot Corporation (IRBT) to Beat Out 4Q Expectations Following Observation of Stellar Pricing Trends Across Whole Portfolio

Loup Ventures' Ausgin Bohlig sees a lot of legway for the robot market to grow on domestic and international fronts in a report optimistic on IRBT's positioning for gains.

Could iRobot Corporation (NASDAQ:IRBT) have outclassed expectations during its fourth quarter with robot sales? A research analyst at Loup Ventures is wagering yes, believing holiday pricing trends point to an outperformance in this tech player’s corner.

Loup Ventures’ Austin Bohlig not only thinks the holidays treated the world’s top maker of robotic vacuums and wet floor products quite well, but says investors should “expect iRobot to have cleaned up during [the] holiday season.” Likewise, the analyst pinpoints the domestic robot market as one of the segments showcasing the most accelerated growth. Considering this tech stock’s standing as well as “premium tech,” Bohlig calls for iRobot to maintain over 20% in revenue gains this year.

What of rumors of rising rivalry threatening to put a dent in iRobot’s mark share? While the analyst acknowledges “increased competition has been a growing threat,” particularly “in recent quarters,” he nonetheless remains unfazed: “we believe these threats are overblown and believe the company is in position to outperform current expectations over the next year.”

Determining “strong pricing trends across [IRBT’s] across entire portfolio,” which the analyst notes has him upbeat on the company: “We find this encouraging because we felt pricing last holiday season was strong, which translated into the company beating Dec-16 Street revenue expectations by ~$6M (or 3%), and EPS by $0.08 (or 20%). Given these strong pricing data points, coupled with Management’s history of providing conservative guidance we expect the company to once again exceed Dec-17 Street estimates.”

While Bohlig anticipates iRobot will beat out Street-wide expectations in its fourth quarter showcase, all investors are keyed into how the guide will look for this year; an outlook the analyst believes will be “solid,” albeit “conservative.” Yet, this will all serve to line up the iRobot team for “multiple beat and raise quarters throughout the year.” Even with apprehensions circling rising rivalry threats, the analyst contends, “the domestic robot market is inflecting, and given the most penetrated robotics vacuum market in the world (the U.S.) is less than 10%, we believe there is plenty of room to run both domestically and internationally.”

Consensus presently angles for a 2018 revenue guide around $1.0 billion, which would signify about 16% year-over-year growth. Notably, the tech company has seen 3 back-to-back quarters of shooting past 20% growth, with Bohlig spotting a track for IRBT to continue to spiral past 30% for 2017. For the new year, the analyst ventures the robotic vacuum market could rev up 26% year-over-year. In a time where the analyst finds it “likely” to see a new robot lawnmower from IRBT, this could prove to be a “positive catalyst” for 2018.

Ahead of the fourth quarter print due February 14th, the analyst is dialing up his revenue expectations to the tail-end of the IRBT team’s 2017 guide of $870 to $880 million against consensus of $875 million. The analyst’s projection looking for $1.1 billion in revenue for 2018 hovers above the Street’s $1 billion factoring in lawnmower revenue of roughly $60 million this year, should Bohlig’s expectations to see the lawnmower debut prove true. Lawnmower or not, the analyst believes even if the launch is delayed to next year, the company can still experience around 23% year-over-year growth in 2018.

TipRanks highlights a largely cautious Wall Street surveying this robot vacuum cleaner maker’s opportunity, with 6 out of 7 analysts of the last 3 months on the sidelines and just one bullish on iRobot stock. With a loss potential of nearly 9%, the stock’s consensus target price stands at $74.50.

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