Here’s Why iRobot Stock Suddenly Soared This Morning

what happened

Shares of autonomous vacuum cleaner company iRobot (IRBT -3.93% suddenly soared this morning, and as of noon ET on Thursday, the stock was up 10%. A prominent analyst gave some positive commentary on the company this morning, which is certainly helping. However, something much bigger might be providing iRobot with a very welcome boost today.

so what

iRobot was hit hard in 2021 by tariffs. During the administration of President Donald Trump, the US and China exchanged escalating tariffs on certain products. In 2021, iRobot paid over $48 million in tariffs, a huge number for small-cap company with a market capitalization under $1.8 billion.

A Roomba vacuum cleaner is pictured in a living room setting.

Image source: iRobot.

In 2020, the US government had made exclusions to Section 301 Tariffs, to iRobot’s benefit. These exclusions subsequently expired. But yesterday, the Office of the United States Trade Representative said it was reinstating expired exclusions on certain products through the end of this year. Among the tariff exclusions are robotic vacuum cleaners, iRobot’s bread and butter.

now what

In its most recent quarterly conference call to discuss financial results, management had guided for $42 million to $44 million in full-year tariff costs. It would appear that this may no longer be the case, which would be a direct boost to the company’s bottom line.

With this catalyst, perhaps it’s easier to understand why analyst Michael Latimore of Northland Securities is bullish on the stock. According to The Fly, Latimore believes iRobot can reach $85 per share, which represents almost 30% more upside even after today’s pop.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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