Is IRBT a buy after stock price was cut by more than half?
iRobot Corporation (NASDAQ: IRBT) is up 3.3% at $66.62 today as the stock attempts to close last Thursday's post-earnings bear gap. Though this selloff stopped just short of IRBT's Jan. 28 two-year low of $58.44, it still sits at a 49.9% year-over-year deficit. Today's pop has put the stock back above its year-to-date breakeven, but now it will have to contend with the 80-day moving average, which rejected last week's rally.
Last Friday, Citigroup reiterated its "hold" rating and its $80 price target. This puts the 12-month consensus price target at $77.67 -- a 16.5% premium to current levels. Meanwhile, all six of the analysts in coverage call the equity a "hold" or worse.
The stock is heavily shorted, too. Short interest has only climbed 0.3% in the last two reporting periods, but the 6.47 million shares sold short make up almost a quarter of the stock's available float, and would take nearly three weeks to cover, at IRBT's average daily pace of trading.
From a fundamental point of view, iRobot stock has a very intriguing long-term outlook. The company is well positioned to sustain its growth with $234.5 million in cash and $43.46 million in total debt on its balance sheet. iRobot stock also has a decent valuation at a price-sales ratio of 1.12.
In addition, IRBT is estimated to grow revenues 15.1% and to grow earnings 150.3% in the current fiscal year, with an average expected earning per share (EPS) of $4.28.
Overall, the robotic tech company's biggest downfall is its inconsistent bottom-line growth. Nonetheless, iRobot has produced steady annual revenue growth in recent years, increasing 43% since fiscal 2018.
Considering all this, now might be an opportune time to get in on iRobot stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 55% stands higher than just 17% of readings from the past year. In other words, options traders are pricing in relatively low volatility expectations at the moment.