2018-11-14 11:30:24 | iRobot falls after Spruce Point reiterates call for 70%-80% downsideIn a new research report posted on its website, Spruce Point Capital Management reiterates a "Strong Sell" rating on iRobot (IRBT). The firm continues to see 70%-80% downside risk in the shares. The stock in late morning trading is down 4%, or $3.65, to $87.67. Spruce Point sees "significant" average selling price declines, market share losses, and cash flow contraction for the maker of robot vacuums. "With the uplift benefit from distributor acquisitions set to lapse, and with punitive Chinese tariffs set to expand from 10% to 25% in 2019, we believe that iRobot's is set up for significant revenue growth deceleration, margin contraction, and earnings headwinds next year," says the short selling research firm. Amazon (AMZN) is becoming an increasingly important sales channel for iRobot, but the retailing giant has "less incentive to promote brands with high name recognition than do brick-and-mortar stores," says Spruce Point. Amazon enables a level of competition which undermines the importance of iRobot's recognizable brand, it says. Reference Link | |
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