IRobot Retreats After JPMorgan Cuts Rating To Sell

The shares of robot maker iRobot (IRBT) are sitting out today’s rally after JPMorgan downgraded the stock to Underweight, the firm’s equivalent of a sell rating. The stock’s recent rally is “too much, too soon,” the firm warned.

WHAT’S NEW: Noting that iRobot has rallied 25% since mid-February, JPMorgan analyst Mark Strouse believes that the shares are pricing in “near flawless execution” of the company’s new home robot launches and its international expansion plan. The company’s newest Braava robot, which was launched earlier this week and, like its predecessors, is designed to clean kitchens and bathrooms, “may not be as revolutionary as some investors had hoped,” the analyst stated. Some investors were hoping that iRobot would launch a new type of robot, such as a robotic lawn mower, he reported. Moreover, iRobot expects its revenue growth to accelerate in fiscal 2017, due to international expansion and more targeted marketing of its Scooba and Braava robots. However, the company’s international revenue increased just 2% last year, and Braava and Scooba products currently account for about 10% of the robot maker’s revenue, Strouse noted. The analyst set a $28 price target on the shares.

PRICE ACTION: In late morning trading, iRobot slid 2.2% to $34.65.