Dyson's Entry Into Home Robot Market Validates iRobot (IRBT) and Category - Needham & Company

Needham & Company analyst James Ricchiuti reiterated his Buy rating and $43 price target on iRobot Corporation (NASDAQ: IRBT) Thursday saying Dyson's widely anticipated entry into the home robot market simply validates the category.

As expected, Dyson took the wraps off the Dyson 360 Eye early Thursday in Japan. Details on the robotic vacuum were about as expected, stronger suction power than the Roomba but a higher profile that makes it unable to get under furniture and beds. The new robot, which will be available next spring in Japan with broader distribution in the 2H of 2015 and carries a price tag above the Roomba 880.

Ricchiuti said, "There's no denying that Dyson's entry into the market represents the most formidable challenge to IRBT in the home robot floor cleaning market to date, but we doubt it's a Roomba killer. Clearly, it has more suction power than the Roomba, owing to Dyson's digital motor and cyclone technology, but the taller profile of the 360 Eye will prevent it from getting underneath most furniture and beds, which the Roomba can. It will also carry a price tag that reportedly is at least 40% higher than the most expensive Roomba. And questions about whether the vision technology in the 360 Eye is superior to the navigation technology in the current generation Roomba may be a moot point, particularly as IRBT plows R&D into its next-generation navigation technology. Known as visual simultaneous localization and mapping (VSLAM), this next-gen navigation technology will use a camera instead of laser range finder, thus enabling future Roombas to store images and build virtual maps. Much has also been made of Dyson's reported $47M investment in its home robot technology over 16 years, but IRBT has spent over $215M in R&D since 2010, much of that focused on its home robot products."

He added, "Dyson's entry to the market should lay to rest the view held by some that home robotic vacuums are novelty products, a notion we've always found puzzling considering that IRBT has shipped over 10M units into the market, with the latest 880 models selling for $700. With the home robotic vacuum market less than 20% penetrated, we believe the market can support competition, particularly one that validates the space like a Dyson can. While it is unrealistic to assume that IRBT is going to retain 65%-plus market share in the category longer term, we believe IRBT can maintain a leadership position."

For an analyst ratings summary and ratings history on iRobot Corporation click here. For more ratings news on iRobot Corporation click here.

Shares of iRobot Corporation closed at $31.07 yesterday.

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