iRobot Gets Some Relief From Navy Contract (IRBT)

A $26 Million U.S. Navy contract was just the boost that iRobot Corporation (IRBT) needed. According to the terms of the contract, iRobot will deliver an additional 213 iRobot PackBot Man Transportable Robotic Systems (MTRS) as well as spare parts for the Robots already in use in the field. The $26 Million award was the 3rd round of funding and brought the total so far to $43 Million.

The press release also noted that the U.S. military’s dual-sourced MTRS program has requirements for up to 1200 robots through 2012. So we can expect millions more in contracts in the next few years.

The timing of this contract couldn’t be any better. After an IPO in November, iRobot’s stock has been in the doghouse since they disappointed with their earnings in the fourth quarter. There was a short term fake relief in the shape of Jim Cramer. Jim Cramer recommended the stock on his Mad Money show and even got the CEO, Colin Angle, to talk up the stock. As you would expect, the stock spiked up in after hours trading and continued the uptrend the following day as well. But as seen with a lot of Cramer’s picks, the stock slowly came back down on low volume.

Now that we have a real catalyst in the form of the Navy contract it would be interesting to see how the stock reacts the next few days. I am really interested in finding out if the stock holds its gains of the last few days plus hopefully keep inching up. iRobot closed up only 7 cents today with about half the average volume. Not a good sign in my point of view. The worst thing would be the stock going down on low volume. When I recommended this stock on February 16th, I clearly mentioned that this one is for long term investors only. I still stand by that as I really like the long term prospects of this company. I can’t wait to see how the stock reacts the next few days. Will it go back up in the low to mid 30’s?

IRBT 6 month chart: