IRobot Stock Cut to Underweight at J.P. Morgan on Valuation

IRobot shares were cut to underweight at J.P. Morgan. Analyst Mark Strouse said iRobot stock is overvalued after it surged 50% since March 18.
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iRobot shares  (IRBT) - Get Report fell after the consumer-assistant company was downgraded to underweight from neutral by J.P. Morgan analyst Mark Strouse.

He cut his share-price target for iRobot to $41 from $43.

The recent surge by the stock was “unjustified,” Strouse wrote in a report, according to Bloomberg. 

Since touching bottom March 18, iRobot shares have jumped 50%, compared with an 18% gain for the S&P 500 index.

iRobot stock is overvalued, accounting for “a weaker-than-expected start to the year” and “likely significantly reduced near-term consumer spending on high-end discretionary products,” he wrote in a report, according to Bloomberg. 

Of course, the coronavirus pandemic is responsible for much of that, Strouse noted.

The company’s outlook is “tilted unfavorably near term,” he said. “IRBT is already a crowded short.”

In February, iRobot had predicted that for 2020 as a whole, revenue should come in at $1.32 billion to $1.35 billion. And on March 23, iRobot projected first-quarter 2020 revenue at $175 million to $185 million. 

But in March, the company said, “as a result of the uncertainty surrounding covid-19, including its duration and broader macroeconomic impact, as well as the evolving tariff exclusion process, iRobot is withdrawing its financial expectations for [full-year] 2020 provided last month.”

At the same time, the Bedford, Mass., company said in March that its request to the government for a tariff exclusion for its Roomba robot vacuum products is advancing, though it hasn’t yet been approved.

iRobot shares recently traded at $49.80, down 2.2%, compared with a 1.6% gain for the S&P 500 Index.