Benchmark Gives Update On iRobot Corporation Following Earnings; Raises PT To $40

iRobot IRBT reported Q1FY11 sales of $106 million and EPS of $0.27 vs. a consensus estimate of $104 million and $0.23. Revenue grew by 12% y/y, with EPS up 15% on a 700 bps gross margin improvement. Management reaffirmed its FY11 outlook, including sales of $450-465 million and EPS guidance of $0.90-1.00. Benchmark believes iRobot has potential upside this year from Home Robots. It is encouraged by the early success of the Scooba 230, the new floor washing robot, and believe this represents another fast-growing market for iRobot. The launch of a better Roomba this year should also drive higher Home Robot sales in the US, while guidance assumes flat US Home Robot sales and limited contribution from the Scooba. Benchmark increases its FY11 sales by $5 million to $460 million and maintains its EPS at $1.00. Benchmark believes the company has EPS upside from better margins if it delivers on top-line. Benchmark publishes its FY12 estimates of $531 million in sales and $1.32 in EPS, reflecting 15% top-line and 30% EPS growth. It increases the 12-month Price Target from $36 to $40. IRBT closed Wednesday at $35.37