IRobot (IRBT) Withdraws Annual View On Coronavirus Concerns

iRobot Corporation (NASDAQ:IRBT) yesterday provided a business update on the impacts of the coronavirus outbreak on its operations. Also, it discussed the progress made toward excluding robot vacuum products — Roomba — from the ambit of Section 301 (related to tariffs).

It is worth mentioning here that the industrial robot manufacturer’s share price gained 5.4%. The closing trade price for the stock was $40.76.

Inside the Headlines

iRobot has noted that the pandemic restricted its operations, hurting manufacturing supply chain and some sales activities. Also, keeping in mind the safety of its workers, it allowed them to work from home.

Additionally, the company stated that its request to exclude Roomba products from tariffs imposed under section 301 moved a step forward. The advancement to stage 3 of the exclusion process is being positively seen by iRobot. If granted, the exclusion might help the company to better deal with the prevailing macro headwinds.

Before proceeding further, it is worth mentioning that the U.S.-China trade was adversely impacting the global industrial robotics market. Higher tariffs were imposed in May 2019 on products imported from China, which included robotic vacuum cleaners manufactured in Beijing. iRobot estimated $47-$50 million of impact of Section 301 on its gross profit for 2020 (including $6-$8 million for the first quarter).

Considering the uncertainties, the company expects sales of $175-$185 million for the first quarter of the year. This projection suggests a year-over-year decline of 22-26%. Earlier, the company had predicted sales decline of 8-12% for the first quarter.

Further, iRobot suspended its projection for 2020.

Earlier, it had expected revenues of $1.32-$1.35 billion for the year, suggesting year-over-year growth of 9-11%. Adjusted gross profit was anticipated to be $510-$523 million, while gross margin was projected to be 38-39%. Adjusted operating income was expected to be 55-$75 million, with margin of 4-6%. Adjusted earnings per share were predicted to be $1.70-$2.30.

Zacks Rank, Earnings Estimates and Price Performance

iRobot, with a market capitalization of $1.1 billion, currently carries a Zacks Rank #4 (Sell). In the past three months, the company’s shares have moved down 20% compared with the industry’s decline of 39.5%.

The Zacks Consensus Estimate for its earnings is pegged at 85 cents for 2020 and $1.61 for 2021, reflecting declines of 20.6% and 25.8% from the respective 60-day-ago figures.

iRobot Corporation Price and Consensus