Raymond James: iRobot Shares Reflect A More Balanced Risk-Reward Trade-Off

Even as Amazon.com, Inc. (NASDAQ: AMZN) poses a competitive threat due to its purported interest in the market for home robots, iRobot Corporation (NASDAQ: IRBT) is likely to be stymied by a strong rally seen shares since February, according to an analyst at Raymond James.

The Analyst

Brian Gesuale downgraded iRobot from Outperform to Market Perform.

The Thesis

Since Feb. 9, shares of iRobot have rallied 40 percent compared to a 5-percent advance by the S&P 500 Index, Gesuale said in a Tuesday note.

Many factors that promoted the previous upgrade such as an "overly conservative reset of consensus estimates, the rapid compression in valuation, and near-term hypersensitivity to competitive pressures" now stand reverted, Gesule said.

Additionally, the analyst said current expectations reflect a great deal of positive news on product launches as well as estimate revisions.

Accordingly, Raymond James said shares now reflect a more balanced risk-reward trade-off.

The Price Action

iRobot shares have gained about 5.5 percent in the year-to-date period. At time of writing, shares were down 1.6 percent to $79.57.

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Photo courtesy of iRobot.