iRobot Jumps As Pentagon Stocks Up On Robots

Really, I don’t spend enough time on this blog writing about robots. If I did, I probably already would have you up to speed on the wild doings in shares of iRobot (IRBT), a company which makes military robots as well as the Roomba floor-cleaning robot and the Scooba floor-washing robot.

The company’s shares have been flying lately. One reason: an AP report on Monday that said the Pentagon plans to buy up to 3,000 additional robots to be used by soldiers in Iraq and Afghanistan to detect explosive devices and roadside bombs.

The AP said that the Defense Department placed an urgent request in mid-July to deliver more of these robots, citing “a federal contracting web site.” According to the story, the Pentagon wants 1,000 more explosive-detecting robots by the end of the year, and potentially 2,000 more by 2012.

The story noted that iRobot, along with Foster-Miller Inc. and Exponent Inc. (EXPO) have supplied the DOD with counter-explosive robots in the past.

Wednesday morning, Needham analyst James Ricchiuti repeated his Buy rating on the stock, citing strong demand for both military and consumer robots, and taking note of the rise in the stock price on the DOD’s search for new robots. He also notes that the company next week will launch a new version of its Roomba vaccuum cleaner line next week (maybe they should also make a military Roomba to clean up Iraq, where things have gotten entirely too messy…).

Meanwhile, Roomba-fans (oh, there are lots of Roomba fans; there is a whole cult of people who modify Roombas for fun) are trying to figure out what iRobot is going to do next on the consumer side of its business: the company has said it will introduce two new non-floor-cleaning consumer products in September, but so far, they haven’t said what they are (I assume they are not going to announce one of these).

As for the stock, some odd things have been going on. True, the stock jumped on the news about the DOD’s need for more robots; the stock was up $1.01 Wednesday to $22.74, adding to a gain of $2.39 Tuesday. The rally really started earlier though: on August 8, the stock jumped $2.99 - 18% - to $19.49, on no news. In short, the stock is up 38% over the last week. Just why the stock started moving last week is unclear, although as the AP story notes the original DOD request for more robots dates back to the middle of last month.

I’ve left a message for the company to try to get some elaboration on all of this; if you have any insights, pass them along.

IRBT 1-yr chart:

Comments

[Malkiel:]

Good for them, but nobody should be counting on those 2012 deliveries. The whole Bush/Iraq game will be up by January '09 and those contracts will likely be cancelled as we exit rather than clean up the mess...

2007 Aug 16 09:52 AM

[Anongeneral:]

Robots are becoming increasingly pervasive in our lives and there is no reason why they shouldn't be increasingly used in the military as well.

2007 Aug 17 02:31 PM