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iRobot, Watchers International, Alphabet and Western Digital as Zacks Bull and Bear of the Day

Zacks Equity Research
iRobot, Watchers International, Alphabet and Western Digital as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 30, 2019 – Zacks Equity Research highlights iRobot IRBT as the Bull of the Day and Watchers International, Inc. WW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet Inc. GOOGL and Western Digital WDC.

Here is a synopsis of all four stocks:

Bull of the Day:                                              

Shares of iRobot have plummeted roughly 22% since the company reported mixed first-quarter fiscal 2019 financial results on April 23. Despite the recent drop-off, the household robot maker’s top-line outlook appears strong and its longer-term earnings estimate revision picture has turned more positive following its Q1 earnings release. This means at least some analysts are more bullish on iRobot’s bottom line.  

Overview & Recent News

iRobot helped launch the home robot cleaning market with its Roomba robot vacuum all the way back in 2002. The Bedford, Massachusetts-based firm now offers three core products: its Roomba vacuums that start at $299.99, its Braava Robot mops that begin at $199.99, and its Mirra pool cleaners that start at $999.99. Investors should also note that iRobot is preparing to launch two new products during the second quarter.

What’s more, the firm is set to introduce a new category of robot later this year. The brand-new Terra robot lawn mower could help the company attract a whole new segment of consumers. “With the launch of two new products in the second quarter, along with the Terra launch later this year, we will have introduced five major new products in the past 12 months,” founder and CEO Colin Angle said on the company’s earnings call.

Looking ahead, the robotic vacuum firm said that it plans to slowly move production of some of its “more easy to build products” outside of China in an effort to combat tariffs and continued trade dispute worries. Executives noted that the efforts will help iRobot create long-term supply chain flexibility. For now, however, China will remain its production hub.   

Despite the innovations, a massive first-quarter earnings beat, and roughly 9.5% Q1 2019 revenue growth, IRBT stock has plummeted since the firm released its Q1 results. Much of the downturn can be attributed to its sales miss and its roughly 8% year-over-year adjusted earnings decline.

As we mentioned at the top, shares of iRobot have tumbled 22% since April 23. Nonetheless, shares of IRBT are still up approximately 22% this year and 75% in the past 12 months. And it seems that the post-Q1 selloff might be over for now, with IRBT shares showing signs of stability. iRobot saw its stock price pop nearly 2% during regular trading hours Monday to close at $101.95 per share.

Bear of the Day:

Shares of Weight Watchers International, Inc. have tumbled over 50% in 2019, driven by lowered 2019 earnings and sales guidance. Despite the massive selloff, it appears that Weight Watchers could be headed for a continued downturn even as it tries everything it can to excite investors heading into Q1 earnings, including its new stock ticker.

Overview & Recent News

Weight Watchers officially began trading under its WW ticker on April 22. The company decided to move on from its old WTW in an effort to help it stand out as a more complete wellness firm and not just a weight loss platform. The New York-based company’s stock had soared back in recent years on the back of Oprah Winfrey-based momentum and strong membership growth.

The rebranded company has boasted about its WW line of kitchen tools and products, its meal-prep kits, which hope to compete against Blue Apron, and other newer initiatives. Yet, Wall Street and investors have seemed to care little about the company’s plans to expand and diversify. In fact, the massive 12-month drop-off has prompted Weight Watchers to roll out a new advertisement campaign that features Winfrey and aims to highlight the company’s WW app and more.

As we mentioned at the top, Weight Watchers last quarter lowered its fiscal 2019 revenue guidance to only $1.4 billion, down from consensus expectations of over $1.65 billion. Worse still, the company’s updated full-year earnings guidance dropped over 60% below projections to between $1.25 and $1.50 a share. Weight Watchers has seen its revenue and earnings fluctuate before and it is coming off a strong 2018, which makes current-year comparisons more difficult. Nonetheless, the 2019 outlook could see things get even worse for the firm.

Shares of WW have tumbled 74% over the last year and roughly 52% in 2019. Jumping back even further, we can see that Weight Watchers stock has been a bit of a roller coaster over the last 15 years.

Outlook & Earnings Trends

Moving on, Weight Watchers is scheduled to report its first quarter 2019 financial results after market close on Thursday, May 2. With this in mind, our current Zacks Consensus Estimate calls for the company’s Q1 revenue to sink 12.4% from the year-prior quarter to reach $357.73 million. Plus, the company’s current full-year revenue is projected to fall 8.6% to $1.38 billion. And fiscal 2020’s revenues are projected to pop slight above our 2019 estimate but still come in well below 2018’s $1.51 billion.

Things appear even worse for WW at the bottom end of the income statement. The company’s adjusted Q1 earnings are projected to tumble over 187% to a loss of $0.27 per share. Meanwhile, Weight Watchers’ fiscal 2019 EPS figure is expected to decline by nearly 60%.

Additional content:

GOOGL Posts Mixed Q1, Shares Down from All-Time Highs

Google parent company Alphabet Inc. has reported Q1 earnings results after Monday's close, with its bottom line coming in stronger than expected -- $11.90 per share vs. $10.57 in the Zacks consensus, and well ahead of the $9.93 per share reported in the year-ago quarter. Revenues, however, were weaker than anticipated at $29.48 billion (after Traffic Acquisition Costs [TAC] of $6.86 billion were subtracted from the headline), compared with the $29.99 billion analysts had been expecting.

Shares for Alphabet had previously been trading at all-time highs, so the post-report pullback of about 5.5% at this hour is selling the news, especially with the company's top-line miss. Elsewhere, Paid Clicks rose 39% year over year while Cost per Click fell 19%. Revenue growth isn't in the league of where Alphabet had been previously, however, up 17% in Q1 2019. TAC revenue appears to have stabilized around 22%.

Also selling off around 5% after the closing bell is Western Digital, the Zacks Rank #4 (Sell)-rated tech storage solutions provider. The company posted earnings of 17 cents per share, down almost 3x the expected 49 cents per share. The San Jose, CA-based company missed its $3.7 billion top-line estimate, bringing in $3.67 billion. This marks the third-straight quarterly miss for Western Digital; before that, the company had not come up short of estimates since Q1 of 2016.

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