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iRobot (IRBT) Stock Slips, Should You Buy The Dip?

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Shares of iRobot Corporation (IRBT - Free Report) sank 7.28% on Wednesday thanks to a significant analyst downgrade.

Wealth management and investment banking firm Canaccord Genuity downgraded iRobot’s stock from a “buy” to a “hold” in a note to clients this morning. The firm gave the company a $90 price target, which marks a significant decline.

While Canaccord Genuity remains relatively positive on iRobot's long-term outlook, the firm feels that without a new product to help boost 2017 sales, the company might be hurt during the all-important holiday season.

The maker of Roomba autonomous robot vacuum cleaners, as well as similar floor mop and pool cleaner versions, had received almost nothing but praise this year until this point. Even with today’s big dip, the company is only slightly off its 52-week and all-time high of $99.98 per share.

Positive Outlook

Still, Canaccord Genuity’s assessment might be an outlier at the moment, as iRobot is currently a Zacks Rank #1 (Strong Buy). The company recently posted massive first-quarter beats for both earnings and revenue, and at beginning of the current quarter, iRobot completed the purchase of its Japanese distributor. The company’s updated full-year guidance has helped lead to a flurry of earnings estimate revision activity for both 2017 and 2018.

Furthermore, our current full-year Zacks Consensus Estimate calls for annual sales growth of 19.04% this year, which is far above the industry average of 9.49%. This helped the in-home robot company score an “A” for Growth in our Zacks Style Score system.

Shares of iRobot over the last three months have yielded a return of 67.25%, which outperformed the average Zacks Industrial Automation and Robotics industry growth rate of 6.22%. On top of that, Industrial Automation and Robotics industry currently sits in the Top 9% of the Zacks Industry Rank.

iRobot has been on an insane run, and today’s dip could indicate that investors wanted the stock to pull back a little, but it could also provide a discounted buying opportunity.

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