iRobot Corp Posts Q2 Beat But Mutes FY2021 Guidance

iRobot Corp. (IRBT) reported stronger-than-expected Q3 results, topping both earnings and revenue estimates. Higher-than-expected revenues and margins as a result of cautious spending somewhat offset the negative impact from supply chain challenges.

However, the company muted its annual FY2021 outlook based on revised expectations of the timing of a potential tariffs exclusion and higher transportation costs.

Shares of the robotics company, which engages in the designing and building of robot vacuums, robot mops, and pool cleaners, remained flat in Wednesday’s extended trading session.

Q3 adjusted earnings of $1.67 per share came in more than double analysts’ expectations of $0.71 per share. The company reported earnings of $2.58 per share in the prior-year period.

Moreover, revenues jumped 7% year-over-year to $440.7 million and exceeded consensus estimates of $417.04 million. The increase in revenues reflected a surge in mid-tier and premium robot revenues, which increased 14% year-over-year. Regionally, EMEA saw 15% growth with 5% growth in the U.S. and 2% in Japan. (See iRobot stock charts on TipRanks)

iRobot Cuts FY2021 EPS Outlook

Based on updated expectations about the timing of a potential tariff exclusion and the impact of higher transportation costs, iRobot Corp. updated its guidance for FY2021.

For FY2021, the company forecasts adjusted earnings in the range of $1.15 to $1.74 per share, reduced to almost half of the previous guidance range of $2.25 to $3.35 per share.

Further, annual revenues are now forecast to be in the range of $1.55 – 1.59 billion, versus the consensus estimate of $1.58 billion and the prior guided range of $1.55 – $1.62 billion.

Sharing his thoughts on the company’s FY2021 guidance, CEO Colin Angle commented, “As we continue to manage through component availability challenges and contend with protracted shipping timeframes, shipping delays and related logistical issues, we have refined our FY21 revenue outlook accordingly.”

Regarding the impending tariff relief he added, “Tariff relief is now more likely to occur next year and, if granted, it will not be retroactive earlier than October 12, 2021. Had a tariff exclusion retroactive to January 1 been granted this year, our FY21 EPS would have remained within the expectations we set at the end of July.”

Bank of America Securities analyst John Babcock recently decreased the price target on iRobot Corporation to $78 (0.9% upside potential) from $85 and reiterated a Sell rating.

Overall, the stock has a Hold consensus rating based on 4 Holds and 1 Sell. The average iRobot price target of $90.50 implies 17% upside potential from current levels.

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