iRobot Stock Slammed With Another Downgrade

Options traders, though, have been initiating calls at a quick clip

Managing Editor
Oct 8, 2018 at 10:03 AM
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iRobot Corporation (NASDAQ:IRBT) is down 4.7% at $101.13 in early trading, after Piper Jaffray downgraded the Roomba maker to "neutral" from "overweight," and maintained its $90 price target -- a 14.4% discount to last Friday's close. In addition to concerns over the stock's valuation, the firm said trade tariffs could negatively impact the company's 2019 guidance. 

Today's bear note is far from the only negative analyst attention iRobot stock has received in recent weeks. In fact, just last month the stock was downgraded at Sidoti, and coming into today, seven of the nine covering analysts sport a tepid "hold" rating. Plus, IRBT's average 12-month price target of $98.20 comes in at a 7.4% discount to current levels.

Long term, iRobot stock has been a major outperformer, though in recent months, the equity has been stuck in a sideways trend between the $100 mark -- currently home to its 50-day moving average -- and the $116-$117 region, near its Aug. 28 record $118.75. Plus, IRBT has added 32% year-to-date.

Per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1,184 IRBT calls and 524 puts have been bought to open over the past 10 days. Albeit lighter absolute volume,  the tech concern's 10-day call/put ratio of 2.26 ranks in the 79th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

Outside of the options pits, shorts have been in covering mode, as short interest on iRobot fell 24% during the past two reporting periods. Nevertheless, the 8.11 million shares still sold short represents a whopping 30% of the stock's total available float. At IRBT's average daily trading volume, it would take short sellers roughly two weeks to cover these remaining bearish bets.

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