iRobot Spikes 9% On 4Q Profit Beat; Street Says Hold

iRobot shares climbed 9% in after-hours trading on Feb. 10 after the maker of the Roomba robot cleaner reported strong 4Q results.

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The company’s 4Q earnings per share (EPS) of $0.84 topped analysts’ estimates of $0.31. Revenues came in at $544.8 million, up by 28% year-on-year and ahead of the consensus estimates of $494.1 million.

For this year, iRobot (IRBT) expects EPS to land between $3 to $3.25 with sales of $1.63 billion to $1.67 billion.

“Our outlook for 2021 reflects our confidence that the growth drivers for our business will remain largely intact over the coming quarters,” iRobot’s CEO Colin Angle commented. “We believe that our success in continuing to drive solid top-line expansion in 2021 will also enable us to fund investment into key areas of our business and help mitigate the impact of tariffs on our 2021 profitability.”

Angle added “As we continue to execute on our plans, we are excited about our prospects to sustain solid top-line growth into 2022 and convert that expansion into 2022 profit margins and EPS that exceed 2020 levels.”

In the fourth quarter, sales grew at a rate of more than 25% in every major geographic region, which led to higher operating income and EPS. According to iRobot, online retailing of its products grew 70% year-on-year and comprised 60% of total sales in 4Q. (See iRobot stock analysis on TipRanks)

The stock ballooned 51.6% over the past month, while the Street is neutral about the stock with a Hold consensus rating. That’s based on 3 analysts recommending a Hold and 1 analyst suggesting a Sell. Following the sharp rally, the average analyst price target of $104.67 implies 17.7% downside potential to current levels.

Late last month, Northland Securities analyst Michael Latimore downgraded the stock from a Buy to a Hold, but raised the price target from $100 to $120 (5.7% downside potential).

Latimore said that the company is “uniquely well-positioned in its target markets” and forecasted strong 4Q results. However, the analyst believes that “the recent meteoric move in the stock is associated with unique technical activity tied to Reddit” and could be short-lived.