Downgrade Sends iRobot Stock to New Lows

IRBT hit a nearly three-year low out of the gate

Oct 9, 2019 at 10:01 AM
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The shares of iRobot Corporation (NASDAQ:IRBT) are down 9.4% at $52.02, after Raymond James downgraded the stock to "underperform" from "market perform," citing expectations for "robot wars," with rising competition "peeling back prices at the high end." This will likely increase pricing pressure on the Roomba maker, though the brokerage firm said a U.S.-China trade deal could help stabilize IRBT shares.

Since topping out at record high of $132.88 on March 5, iRobot stock has plunged 61% -- tagging nearly three-year low of $51.14 during today's early morning drop. The equity's 20-day and 32-day moving averages have created additional pressure since a late-July earnings-induced bear gap. Given IRBT's dismal history of earnings reactions, additional losses could be in store when the firm unveils its third-quarter results later this month.

More bearish brokerage notes could turn up the heat on IRBT stock, too. While three of nine analysts still say the underperformer is a "strong buy," the average 12-month price target of $80.71 is a nearly 49% premium to current levels.

Options traders have positioned for bigger losses. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), iRobot's 10-day put/call volume ratio of 1.63 registers in the 76th annual percentile, meaning puts have been bought to open over calls at a quicker-than-expected clip. The November 65 put has seen the biggest increase in open interest over this time frame, and data points to buy-to-open activity here.


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